Correlation Between Visa and Sodexo SA
Can any of the company-specific risk be diversified away by investing in both Visa and Sodexo 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 Visa and Sodexo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Sodexo SA, you can compare the effects of market volatilities on Visa and Sodexo 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 Visa with a short position of Sodexo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Sodexo SA.
Diversification Opportunities for Visa and Sodexo SA
Excellent diversification
The 3 months correlation between Visa and Sodexo is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Sodexo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo SA and Visa 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 Visa Class A are associated (or correlated) with Sodexo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodexo SA has no effect on the direction of Visa i.e., Visa and Sodexo SA go up and down completely randomly.
Pair Corralation between Visa and Sodexo SA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.63 times more return on investment than Sodexo SA. However, Visa Class A is 1.58 times less risky than Sodexo SA. It trades about 0.21 of its potential returns per unit of risk. Sodexo SA is currently generating about -0.06 per unit of risk. If you would invest 31,665 in Visa Class A on November 2, 2024 and sell it today you would earn a total of 2,640 from holding Visa Class A or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.56% |
| Values | Daily Returns |
Visa Class A vs. Sodexo SA
Performance |
| Timeline |
| Visa Class A |
| Sodexo SA |
Visa and Sodexo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Sodexo SA
The main advantage of trading using opposite Visa and Sodexo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Sodexo 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 Sodexo SA will offset losses from the drop in Sodexo SA's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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