Correlation Between Ebro Foods and United Internet
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and United Internet 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 Ebro Foods and United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and United Internet AG, you can compare the effects of market volatilities on Ebro Foods and United Internet 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 Ebro Foods with a short position of United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and United Internet.
Diversification Opportunities for Ebro Foods and United Internet
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ebro and United is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG and Ebro Foods 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 Ebro Foods are associated (or correlated) with United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Ebro Foods i.e., Ebro Foods and United Internet go up and down completely randomly.
Pair Corralation between Ebro Foods and United Internet
Assuming the 90 days trading horizon Ebro Foods is expected to generate 10.11 times less return on investment than United Internet. But when comparing it to its historical volatility, Ebro Foods is 3.52 times less risky than United Internet. It trades about 0.09 of its potential returns per unit of risk. United Internet AG is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,599 in United Internet AG on December 4, 2024 and sell it today you would earn a total of 232.00 from holding United Internet AG or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. United Internet AG
Performance |
| Timeline |
| Ebro Foods |
| United Internet AG |
Ebro Foods and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and United Internet
The main advantage of trading using opposite Ebro Foods and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| Ebro Foods vs. Edinburgh Investment Trust | Ebro Foods vs. Aurora Investment Trust | Ebro Foods vs. BlackRock Frontiers Investment | Ebro Foods vs. Vietnam Enterprise Investments |
| United Internet vs. TBC Bank Group | United Internet vs. First Majestic Silver | United Internet vs. Bisichi Mining PLC | United Internet vs. Resolute Mining Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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