Correlation Between Thomson Reuters and Sodexo PK
Can any of the company-specific risk be diversified away by investing in both Thomson Reuters and Sodexo PK 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 Thomson Reuters and Sodexo PK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thomson Reuters Corp and Sodexo PK, you can compare the effects of market volatilities on Thomson Reuters and Sodexo PK 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 Thomson Reuters with a short position of Sodexo PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thomson Reuters and Sodexo PK.
Diversification Opportunities for Thomson Reuters and Sodexo PK
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thomson and Sodexo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Thomson Reuters Corp and Sodexo PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo PK and Thomson Reuters 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 Thomson Reuters Corp are associated (or correlated) with Sodexo PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodexo PK has no effect on the direction of Thomson Reuters i.e., Thomson Reuters and Sodexo PK go up and down completely randomly.
Pair Corralation between Thomson Reuters and Sodexo PK
Considering the 90-day investment horizon Thomson Reuters Corp is expected to generate 0.79 times more return on investment than Sodexo PK. However, Thomson Reuters Corp is 1.27 times less risky than Sodexo PK. It trades about 0.08 of its potential returns per unit of risk. Sodexo PK is currently generating about 0.03 per unit of risk. If you would invest 11,387 in Thomson Reuters Corp on November 19, 2024 and sell it today you would earn a total of 5,982 from holding Thomson Reuters Corp or generate 52.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thomson Reuters Corp vs. Sodexo PK
Performance |
| Timeline |
| Thomson Reuters Corp |
| Sodexo PK |
Thomson Reuters and Sodexo PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thomson Reuters and Sodexo PK
The main advantage of trading using opposite Thomson Reuters and Sodexo PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thomson Reuters position performs unexpectedly, Sodexo PK 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 Sodexo PK will offset losses from the drop in Sodexo PK's long position.| Thomson Reuters vs. Rentokil Initial PLC | Thomson Reuters vs. Cass Information Systems | Thomson Reuters vs. Maximus | Thomson Reuters vs. Aramark Holdings |
| Sodexo PK vs. Alfa Laval AB | Sodexo PK vs. Randstad Holdings NV | Sodexo PK vs. Sandvik AB ADR | Sodexo PK vs. Sonova Holding AG |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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