Correlation Between Sodexo SA and Sanofi SA
Can any of the company-specific risk be diversified away by investing in both Sodexo SA and Sanofi 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 Sanofi 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 Sanofi SA, you can compare the effects of market volatilities on Sodexo SA and Sanofi 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 Sanofi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo SA and Sanofi SA.
Diversification Opportunities for Sodexo SA and Sanofi SA
Very good diversification
The 3 months correlation between Sodexo and Sanofi is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and Sanofi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi 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 Sanofi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi SA has no effect on the direction of Sodexo SA i.e., Sodexo SA and Sanofi SA go up and down completely randomly.
Pair Corralation between Sodexo SA and Sanofi SA
Assuming the 90 days horizon Sodexo SA is expected to generate 0.93 times more return on investment than Sanofi SA. However, Sodexo SA is 1.07 times less risky than Sanofi SA. It trades about -0.03 of its potential returns per unit of risk. Sanofi SA is currently generating about -0.3 per unit of risk. If you would invest 7,975 in Sodexo SA on August 30, 2024 and sell it today you would lose (75.00) from holding Sodexo SA or give up 0.94% 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. Sanofi SA
Performance |
| Timeline |
| Sodexo SA |
| Sanofi SA |
Sodexo SA and Sanofi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo SA and Sanofi SA
The main advantage of trading using opposite Sodexo SA and Sanofi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo SA position performs unexpectedly, Sanofi 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 Sanofi SA will offset losses from the drop in Sanofi 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 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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