Correlation Between CVR Energy and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both CVR Energy and Ebro Foods 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 CVR Energy and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Ebro Foods, you can compare the effects of market volatilities on CVR Energy and Ebro Foods 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 CVR Energy with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Ebro Foods.
Diversification Opportunities for CVR Energy and Ebro Foods
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVR and Ebro is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and CVR Energy 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 CVR Energy are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of CVR Energy i.e., CVR Energy and Ebro Foods go up and down completely randomly.
Pair Corralation between CVR Energy and Ebro Foods
Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Ebro Foods. In addition to that, CVR Energy is 10.9 times more volatile than Ebro Foods. It trades about -0.09 of its total potential returns per unit of risk. Ebro Foods is currently generating about -0.05 per unit of volatility. If you would invest 1,616 in Ebro Foods on August 28, 2024 and sell it today you would lose (12.00) from holding Ebro Foods or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVR Energy vs. Ebro Foods
Performance |
| Timeline |
| CVR Energy |
| Ebro Foods |
CVR Energy and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Ebro Foods
The main advantage of trading using opposite CVR Energy and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| CVR Energy vs. Zurich Insurance Group | CVR Energy vs. American Homes 4 | CVR Energy vs. Zoom Video Communications | CVR Energy vs. United Airlines Holdings |
| Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Hyundai Motor | Ebro Foods vs. Toyota Motor Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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