Correlation Between Teradata Corp and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Teradata Corp 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 Teradata Corp and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and Ebro Foods, you can compare the effects of market volatilities on Teradata Corp 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 Teradata Corp with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and Ebro Foods.
Diversification Opportunities for Teradata Corp and Ebro Foods
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teradata and Ebro is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Teradata Corp 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 Teradata Corp 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 Teradata Corp i.e., Teradata Corp and Ebro Foods go up and down completely randomly.
Pair Corralation between Teradata Corp and Ebro Foods
Assuming the 90 days trading horizon Teradata Corp is expected to under-perform the Ebro Foods. In addition to that, Teradata Corp is 6.2 times more volatile than Ebro Foods. It trades about -0.04 of its total potential returns per unit of risk. Ebro Foods is currently generating about -0.15 per unit of volatility. If you would invest 1,626 in Ebro Foods on August 30, 2024 and sell it today you would lose (33.00) from holding Ebro Foods or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradata Corp vs. Ebro Foods
Performance |
| Timeline |
| Teradata Corp |
| Ebro Foods |
Teradata Corp and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradata Corp and Ebro Foods
The main advantage of trading using opposite Teradata Corp and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp 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.| Teradata Corp vs. Tungsten West PLC | Teradata Corp vs. Argo Group Limited | Teradata Corp vs. Hardide PLC | Teradata Corp vs. Versarien PLC |
| Ebro Foods vs. Tungsten West PLC | Ebro Foods vs. Argo Group Limited | Ebro Foods vs. Hardide PLC | Ebro Foods vs. Versarien PLC |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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