Correlation Between RB Global and Sodexo PK

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

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

Diversification Opportunities for RB Global and Sodexo PK

-0.01

Correlation Coefficient

RB Global  Sodexo PK

Good diversification

The 3 months correlation between RBA and Sodexo is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding RB Global and Sodexo PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo PK and RB Global 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 RB Global 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 RB Global i.e., RB Global and Sodexo PK go up and down completely randomly.

Pair Corralation between RB Global and Sodexo PK

Considering the 90-day investment horizon RB Global is expected to generate 0.6 times more return on investment than Sodexo PK. However, RB Global is 1.68 times less risky than Sodexo PK. It trades about 0.11 of its potential returns per unit of risk. Sodexo PK is currently generating about -0.13 per unit of risk. If you would invest  9,085  in RB Global on December 27, 2024 and sell it today you would earn a total of  945.00  from holding RB Global or generate 10.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

RB Global  vs.  Sodexo PK

RB Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RB Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, RB Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sodexo PK

Risk-Adjusted Performance

Very 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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with RB Global and Sodexo PK

The main advantage of trading using opposite RB Global and Sodexo PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Global 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 RB Global 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.