Correlation Between Sodexo SA and Renault SA
Can any of the company-specific risk be diversified away by investing in both Sodexo SA and Renault 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 Renault 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 Renault SA, you can compare the effects of market volatilities on Sodexo SA and Renault 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 Renault SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo SA and Renault SA.
Diversification Opportunities for Sodexo SA and Renault SA
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sodexo and Renault is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and Renault SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renault 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 Renault SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renault SA has no effect on the direction of Sodexo SA i.e., Sodexo SA and Renault SA go up and down completely randomly.
Pair Corralation between Sodexo SA and Renault SA
Assuming the 90 days horizon Sodexo SA is expected to generate 1.11 times more return on investment than Renault SA. However, Sodexo SA is 1.11 times more volatile than Renault SA. It trades about -0.02 of its potential returns per unit of risk. Renault SA is currently generating about -0.37 per unit of risk. If you would invest 8,145 in Sodexo SA on August 28, 2024 and sell it today you would lose (50.00) from holding Sodexo SA or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sodexo SA vs. Renault SA
Performance |
| Timeline |
| Sodexo SA |
| Renault SA |
Sodexo SA and Renault SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo SA and Renault SA
The main advantage of trading using opposite Sodexo SA and Renault SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo SA position performs unexpectedly, Renault 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 Renault SA will offset losses from the drop in Renault 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 |
| Renault SA vs. Carrefour SA | Renault SA vs. BNP Paribas SA | Renault SA vs. Societe Generale SA | Renault SA vs. Credit Agricole 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |