Correlation Between Ebro Foods and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Federal Realty 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 Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Federal Realty Investment, you can compare the effects of market volatilities on Ebro Foods and Federal Realty 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 Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Federal Realty.
Diversification Opportunities for Ebro Foods and Federal Realty
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and Federal is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment 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 Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Ebro Foods i.e., Ebro Foods and Federal Realty go up and down completely randomly.
Pair Corralation between Ebro Foods and Federal Realty
Assuming the 90 days trading horizon Ebro Foods is expected to under-perform the Federal Realty. But the stock apears to be less risky and, when comparing its historical volatility, Ebro Foods is 1.31 times less risky than Federal Realty. The stock trades about -0.07 of its potential returns per unit of risk. The Federal Realty Investment is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11,343 in Federal Realty Investment on August 29, 2024 and sell it today you would earn a total of 182.00 from holding Federal Realty Investment or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Federal Realty Investment
Performance |
| Timeline |
| Ebro Foods |
| Federal Realty Investment |
Ebro Foods and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Federal Realty
The main advantage of trading using opposite Ebro Foods and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Federal Realty 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| Ebro Foods vs. Lendinvest PLC | Ebro Foods vs. Neometals | Ebro Foods vs. Coor Service Management | Ebro Foods vs. Albion Technology General |
| Federal Realty vs. Lendinvest PLC | Federal Realty vs. Neometals | Federal Realty vs. Coor Service Management | Federal Realty vs. Albion Technology General |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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