Correlation Between Sodexo PK and Intertek Group
Can any of the company-specific risk be diversified away by investing in both Sodexo PK and Intertek Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sodexo PK and Intertek Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sodexo PK and Intertek Group plc, you can compare the effects of market volatilities on Sodexo PK and Intertek Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sodexo PK with a short position of Intertek Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo PK and Intertek Group.
Diversification Opportunities for Sodexo PK and Intertek Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sodexo and Intertek is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo PK and Intertek Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertek Group plc and Sodexo PK is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sodexo PK are associated (or correlated) with Intertek Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertek Group plc has no effect on the direction of Sodexo PK i.e., Sodexo PK and Intertek Group go up and down completely randomly.
Pair Corralation between Sodexo PK and Intertek Group
Assuming the 90 days horizon Sodexo PK is expected to generate 0.35 times more return on investment than Intertek Group. However, Sodexo PK is 2.86 times less risky than Intertek Group. It trades about -0.15 of its potential returns per unit of risk. Intertek Group plc is currently generating about -0.23 per unit of risk. If you would invest 1,774 in Sodexo PK on August 29, 2024 and sell it today you would lose (69.00) from holding Sodexo PK or give up 3.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sodexo PK vs. Intertek Group plc
Performance |
| Timeline |
| Sodexo PK |
| Intertek Group plc |
Sodexo PK and Intertek Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo PK and Intertek Group
The main advantage of trading using opposite Sodexo PK and Intertek Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo PK position performs unexpectedly, Intertek Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Intertek Group will offset losses from the drop in Intertek Group's long position.| Sodexo PK vs. Alfa Laval AB | Sodexo PK vs. Randstad Holdings NV | Sodexo PK vs. Sandvik AB ADR | Sodexo PK vs. Sonova Holding AG |
| Intertek Group vs. Maximus | Intertek Group vs. Network 1 Technologies | Intertek Group vs. First Advantage Corp | Intertek Group vs. BrightView Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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