Correlation Between Sodexo SA and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Sodexo SA and Legrand 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 Legrand 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 Legrand SA, you can compare the effects of market volatilities on Sodexo SA and Legrand 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 Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo SA and Legrand SA.
Diversification Opportunities for Sodexo SA and Legrand SA
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sodexo and Legrand is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and Legrand SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand 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 Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA has no effect on the direction of Sodexo SA i.e., Sodexo SA and Legrand SA go up and down completely randomly.
Pair Corralation between Sodexo SA and Legrand SA
Assuming the 90 days horizon Sodexo SA is expected to generate 0.56 times more return on investment than Legrand SA. However, Sodexo SA is 1.79 times less risky than Legrand SA. It trades about -0.01 of its potential returns per unit of risk. Legrand SA is currently generating about -0.15 per unit of risk. If you would invest 8,115 in Sodexo SA on August 25, 2024 and sell it today you would lose (40.00) from holding Sodexo SA or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sodexo SA vs. Legrand SA
Performance |
| Timeline |
| Sodexo SA |
| Legrand SA |
Sodexo SA and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo SA and Legrand SA
The main advantage of trading using opposite Sodexo SA and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo SA position performs unexpectedly, Legrand 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 Legrand SA will offset losses from the drop in Legrand 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 |
| Legrand SA vs. Schneider Electric SE | Legrand SA vs. Publicis Groupe SA | Legrand SA vs. Pernod Ricard SA | Legrand SA vs. Compagnie Generale des |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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