Correlation Between Ebro Foods and Hershey
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Hershey 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 Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Hershey Co, you can compare the effects of market volatilities on Ebro Foods and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Hershey.
Diversification Opportunities for Ebro Foods and Hershey
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Hershey is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Ebro Foods i.e., Ebro Foods and Hershey go up and down completely randomly.
Pair Corralation between Ebro Foods and Hershey
Assuming the 90 days trading horizon Ebro Foods is expected to under-perform the Hershey. But the stock apears to be less risky and, when comparing its historical volatility, Ebro Foods is 6.06 times less risky than Hershey. The stock trades about -0.04 of its potential returns per unit of risk. The Hershey Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 17,284 in Hershey Co on September 27, 2024 and sell it today you would lose (248.00) from holding Hershey Co or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Hershey Co
Performance |
| Timeline |
| Ebro Foods |
| Hershey |
Ebro Foods and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Hershey
The main advantage of trading using opposite Ebro Foods and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| Ebro Foods vs. HCA Healthcare | Ebro Foods vs. Planet Fitness Cl | Ebro Foods vs. Naturhouse Health SA | Ebro Foods vs. Microchip Technology |
| Hershey vs. Symphony Environmental Technologies | Hershey vs. Atalaya Mining | Hershey vs. Hochschild Mining plc | Hershey vs. Silver Bullet Data |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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