Correlation Between Sonova Holding and Sodexo PK
Can any of the company-specific risk be diversified away by investing in both Sonova Holding and Sodexo PK 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 Sonova Holding and Sodexo PK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonova Holding AG and Sodexo PK, you can compare the effects of market volatilities on Sonova Holding and Sodexo PK 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 Sonova Holding with a short position of Sodexo PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonova Holding and Sodexo PK.
Diversification Opportunities for Sonova Holding and Sodexo PK
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonova and Sodexo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sonova Holding AG and Sodexo PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo PK and Sonova Holding 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 Sonova Holding AG are associated (or correlated) with Sodexo PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodexo PK has no effect on the direction of Sonova Holding i.e., Sonova Holding and Sodexo PK go up and down completely randomly.
Pair Corralation between Sonova Holding and Sodexo PK
Assuming the 90 days horizon Sonova Holding AG is expected to generate 1.0 times more return on investment than Sodexo PK. However, Sonova Holding AG is 1.0 times less risky than Sodexo PK. It trades about 0.05 of its potential returns per unit of risk. Sodexo PK is currently generating about 0.05 per unit of risk. If you would invest 5,755 in Sonova Holding AG on August 29, 2024 and sell it today you would earn a total of 1,091 from holding Sonova Holding AG or generate 18.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sonova Holding AG vs. Sodexo PK
Performance |
| Timeline |
| Sonova Holding AG |
| Sodexo PK |
Sonova Holding and Sodexo PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonova Holding and Sodexo PK
The main advantage of trading using opposite Sonova Holding and Sodexo PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonova Holding position performs unexpectedly, Sodexo PK 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 PK will offset losses from the drop in Sodexo PK's long position.| Sonova Holding vs. GN Store Nord | Sonova Holding vs. GN Store Nord | Sonova Holding vs. Bone Biologics Corp | Sonova Holding vs. Smith Nephew plc |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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