Correlation Between Sodexo SA and Edenred SA
Can any of the company-specific risk be diversified away by investing in both Sodexo SA and Edenred 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 Sodexo SA and Edenred SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sodexo SA and Edenred SA, you can compare the effects of market volatilities on Sodexo SA and Edenred 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 Sodexo SA with a short position of Edenred SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo SA and Edenred SA.
Diversification Opportunities for Sodexo SA and Edenred SA
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sodexo and Edenred is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and Edenred SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edenred SA 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 Edenred SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edenred SA has no effect on the direction of Sodexo SA i.e., Sodexo SA and Edenred SA go up and down completely randomly.
Pair Corralation between Sodexo SA and Edenred SA
Assuming the 90 days horizon Sodexo SA is expected to under-perform the Edenred SA. But the stock apears to be less risky and, when comparing its historical volatility, Sodexo SA is 1.61 times less risky than Edenred SA. The stock trades about -0.03 of its potential returns per unit of risk. The Edenred SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,965 in Edenred SA on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Edenred SA or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sodexo SA vs. Edenred SA
Performance |
| Timeline |
| Sodexo SA |
| Edenred SA |
Sodexo SA and Edenred SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo SA and Edenred SA
The main advantage of trading using opposite Sodexo SA and Edenred SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo SA position performs unexpectedly, Edenred 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 Edenred SA will offset losses from the drop in Edenred SA'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 |
| Edenred SA vs. Bureau Veritas SA | Edenred SA vs. Sodexo SA | Edenred SA vs. Legrand SA | Edenred SA vs. Accor S A |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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