Correlation Between Sodexo PK and Thomson Reuters
Can any of the company-specific risk be diversified away by investing in both Sodexo PK and Thomson Reuters 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 Thomson Reuters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sodexo PK and Thomson Reuters Corp, you can compare the effects of market volatilities on Sodexo PK and Thomson Reuters 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 Thomson Reuters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo PK and Thomson Reuters.
Diversification Opportunities for Sodexo PK and Thomson Reuters
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sodexo and Thomson is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo PK and Thomson Reuters Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomson Reuters Corp 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 Thomson Reuters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomson Reuters Corp has no effect on the direction of Sodexo PK i.e., Sodexo PK and Thomson Reuters go up and down completely randomly.
Pair Corralation between Sodexo PK and Thomson Reuters
Assuming the 90 days horizon Sodexo PK is expected to under-perform the Thomson Reuters. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sodexo PK is 1.05 times less risky than Thomson Reuters. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Thomson Reuters Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 16,639 in Thomson Reuters Corp on August 25, 2024 and sell it today you would lose (519.00) from holding Thomson Reuters Corp or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sodexo PK vs. Thomson Reuters Corp
Performance |
| Timeline |
| Sodexo PK |
| Thomson Reuters Corp |
Sodexo PK and Thomson Reuters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo PK and Thomson Reuters
The main advantage of trading using opposite Sodexo PK and Thomson Reuters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo PK position performs unexpectedly, Thomson Reuters 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 Thomson Reuters will offset losses from the drop in Thomson Reuters' long position.| Sodexo PK vs. FitLife Brands, Common | Sodexo PK vs. HUMANA INC | Sodexo PK vs. SCOR PK | Sodexo PK vs. Aquagold International |
| Thomson Reuters vs. Rentokil Initial PLC | Thomson Reuters vs. Performant Financial | Thomson Reuters vs. Cass Information Systems | Thomson Reuters vs. Maximus |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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