Correlation Between Ebro Foods and Uniper SE
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Uniper SE 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 Uniper SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Uniper SE, you can compare the effects of market volatilities on Ebro Foods and Uniper SE 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 Uniper SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Uniper SE.
Diversification Opportunities for Ebro Foods and Uniper SE
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ebro and Uniper is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE 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 Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of Ebro Foods i.e., Ebro Foods and Uniper SE go up and down completely randomly.
Pair Corralation between Ebro Foods and Uniper SE
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.27 times more return on investment than Uniper SE. However, Ebro Foods is 3.64 times less risky than Uniper SE. It trades about -0.14 of its potential returns per unit of risk. Uniper SE is currently generating about -0.06 per unit of risk. If you would invest 1,634 in Ebro Foods on September 3, 2024 and sell it today you would lose (31.00) from holding Ebro Foods or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Uniper SE
Performance |
| Timeline |
| Ebro Foods |
| Uniper SE |
Ebro Foods and Uniper SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Uniper SE
The main advantage of trading using opposite Ebro Foods and Uniper SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Uniper SE 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 Uniper SE will offset losses from the drop in Uniper SE's long position.| Ebro Foods vs. Electronic Arts | Ebro Foods vs. Hochschild Mining plc | Ebro Foods vs. Metals Exploration Plc | Ebro Foods vs. Greenroc Mining PLC |
| Uniper SE vs. Bytes Technology | Uniper SE vs. Livermore Investments Group | Uniper SE vs. FC Investment Trust | Uniper SE vs. Universal Display Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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