Correlation Between SCOR SE and Sodexo SA

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

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

Diversification Opportunities for SCOR SE and Sodexo SA

0.05

Correlation Coefficient

SCOR SE  Sodexo SA

Significant diversification

The 3 months correlation between SCOR and Sodexo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SCOR SE and Sodexo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo SA and SCOR SE 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 SCOR SE 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 SCOR SE i.e., SCOR SE and Sodexo SA go up and down completely randomly.

Pair Corralation between SCOR SE and Sodexo SA

Assuming the 90 days trading horizon SCOR SE is expected to generate 0.97 times more return on investment than Sodexo SA. However, SCOR SE is 1.03 times less risky than Sodexo SA. It trades about 0.23 of its potential returns per unit of risk. Sodexo SA is currently generating about -0.08 per unit of risk. If you would invest  2,501  in SCOR SE on April 23, 2025 and sell it today you would earn a total of  459.00  from holding SCOR SE or generate 18.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SCOR SE  vs.  Sodexo SA

SCOR SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR SE are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SCOR SE sustained solid returns over the last few months and may actually be approaching a breakup point.

Sodexo SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SCOR SE and Sodexo SA

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

The idea behind SCOR SE and Sodexo SA 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.