Correlation Between Ebro Foods and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Alliance Data 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 Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Alliance Data Systems, you can compare the effects of market volatilities on Ebro Foods and Alliance Data 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 Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Alliance Data.
Diversification Opportunities for Ebro Foods and Alliance Data
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and Alliance is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems 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 Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Ebro Foods i.e., Ebro Foods and Alliance Data go up and down completely randomly.
Pair Corralation between Ebro Foods and Alliance Data
Assuming the 90 days trading horizon Ebro Foods is expected to generate 10.7 times less return on investment than Alliance Data. But when comparing it to its historical volatility, Ebro Foods is 3.89 times less risky than Alliance Data. It trades about 0.04 of its potential returns per unit of risk. Alliance Data Systems is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,295 in Alliance Data Systems on September 14, 2024 and sell it today you would earn a total of 3,298 from holding Alliance Data Systems or generate 100.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.6% |
| Values | Daily Returns |
Ebro Foods vs. Alliance Data Systems
Performance |
| Timeline |
| Ebro Foods |
| Alliance Data Systems |
Ebro Foods and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Alliance Data
The main advantage of trading using opposite Ebro Foods and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| Ebro Foods vs. Future Metals NL | Ebro Foods vs. Cornish Metals | Ebro Foods vs. Systemair AB | Ebro Foods vs. Silvercorp Metals |
| Alliance Data vs. Ecclesiastical Insurance Office | Alliance Data vs. Iron Mountain | Alliance Data vs. LPKF Laser Electronics | Alliance Data vs. Cornish Metals |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |