Correlation Between Sodexo SA and Capgemini
Can any of the company-specific risk be diversified away by investing in both Sodexo SA and Capgemini 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 SA and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sodexo SA and Capgemini SE, you can compare the effects of market volatilities on Sodexo SA and Capgemini 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 SA with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo SA and Capgemini.
Diversification Opportunities for Sodexo SA and Capgemini
Excellent diversification
The 3 months correlation between Sodexo and Capgemini is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Sodexo SA 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 SA are associated (or correlated) with Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Sodexo SA i.e., Sodexo SA and Capgemini go up and down completely randomly.
Pair Corralation between Sodexo SA and Capgemini
Assuming the 90 days horizon Sodexo SA is expected to generate 0.53 times more return on investment than Capgemini. However, Sodexo SA is 1.9 times less risky than Capgemini. It trades about -0.11 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.3 per unit of risk. If you would invest 8,145 in Sodexo SA on August 29, 2024 and sell it today you would lose (245.00) from holding Sodexo SA or give up 3.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sodexo SA vs. Capgemini SE
Performance |
| Timeline |
| Sodexo SA |
| Capgemini SE |
Sodexo SA and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo SA and Capgemini
The main advantage of trading using opposite Sodexo SA and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo SA position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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