Correlation Between Compagnie and Sodexo SA
Can any of the company-specific risk be diversified away by investing in both Compagnie and Sodexo SA 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 Compagnie and Sodexo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and Sodexo SA, you can compare the effects of market volatilities on Compagnie and Sodexo SA 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 Compagnie with a short position of Sodexo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Sodexo SA.
Diversification Opportunities for Compagnie and Sodexo SA
Modest diversification
The 3 months correlation between Compagnie and Sodexo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Sodexo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo SA and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Sodexo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodexo SA has no effect on the direction of Compagnie i.e., Compagnie and Sodexo SA go up and down completely randomly.
Pair Corralation between Compagnie and Sodexo SA
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 1.34 times more return on investment than Sodexo SA. However, Compagnie is 1.34 times more volatile than Sodexo SA. It trades about 0.08 of its potential returns per unit of risk. Sodexo SA is currently generating about -0.11 per unit of risk. If you would invest 8,304 in Compagnie de Saint Gobain on August 29, 2024 and sell it today you would earn a total of 214.00 from holding Compagnie de Saint Gobain or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. Sodexo SA
Performance |
| Timeline |
| Compagnie de Saint |
| Sodexo SA |
Compagnie and Sodexo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Sodexo SA
The main advantage of trading using opposite Compagnie and Sodexo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Sodexo SA 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 Sodexo SA will offset losses from the drop in Sodexo SA's long position.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
| Sodexo SA vs. Accor S A | Sodexo SA vs. Publicis Groupe SA | Sodexo SA vs. Legrand SA | Sodexo SA vs. Pernod Ricard SA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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