Correlation Between Ebro Foods and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Lundin Mining 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 Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Lundin Mining Corp, you can compare the effects of market volatilities on Ebro Foods and Lundin Mining 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 Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Lundin Mining.
Diversification Opportunities for Ebro Foods and Lundin Mining
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ebro and Lundin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp 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 Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Ebro Foods i.e., Ebro Foods and Lundin Mining go up and down completely randomly.
Pair Corralation between Ebro Foods and Lundin Mining
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.27 times more return on investment than Lundin Mining. However, Ebro Foods is 3.77 times less risky than Lundin Mining. It trades about -0.04 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about -0.2 per unit of risk. If you would invest 1,596 in Ebro Foods on September 27, 2024 and sell it today you would lose (8.00) from holding Ebro Foods or give up 0.5% 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. Lundin Mining Corp
Performance |
| Timeline |
| Ebro Foods |
| Lundin Mining Corp |
Ebro Foods and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Lundin Mining
The main advantage of trading using opposite Ebro Foods and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining'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 |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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