Correlation Between White Fox and Sodexo PK

Can any of the company-specific risk be diversified away by investing in both White Fox 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 White Fox and Sodexo PK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between White Fox Ventures and Sodexo PK, you can compare the effects of market volatilities on White Fox 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 White Fox with a short position of Sodexo PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Fox and Sodexo PK.

Diversification Opportunities for White Fox and Sodexo PK

0.18

Correlation Coefficient

White Fox  Sodexo PK

Average diversification

The 3 months correlation between White and Sodexo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding White Fox Ventures and Sodexo PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo PK and White Fox 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 White Fox Ventures 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 White Fox i.e., White Fox and Sodexo PK go up and down completely randomly.

Pair Corralation between White Fox and Sodexo PK

If you would invest  0.40  in White Fox Ventures on October 3, 2024 and sell it today you would lose (0.26) from holding White Fox Ventures or give up 65.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

White Fox Ventures  vs.  Sodexo PK

White Fox Ventures

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in White Fox Ventures are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, White Fox showed solid returns over the last few months and may actually be approaching a breakup point.

Sodexo PK

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sodexo PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sodexo PK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with White Fox and Sodexo PK

The main advantage of trading using opposite White Fox and Sodexo PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Fox 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.

The idea behind White Fox Ventures and Sodexo PK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Managers module to screen money managers from public funds and ETFs managed around the world.