Correlation Between Ebro Foods and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Cornish Metals 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 Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Cornish Metals, you can compare the effects of market volatilities on Ebro Foods and Cornish Metals 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 Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Cornish Metals.
Diversification Opportunities for Ebro Foods and Cornish Metals
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ebro and Cornish is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Ebro Foods i.e., Ebro Foods and Cornish Metals go up and down completely randomly.
Pair Corralation between Ebro Foods and Cornish Metals
Assuming the 90 days trading horizon Ebro Foods is expected to generate 19.76 times less return on investment than Cornish Metals. But when comparing it to its historical volatility, Ebro Foods is 6.1 times less risky than Cornish Metals. It trades about 0.03 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 685.00 in Cornish Metals on November 2, 2024 and sell it today you would earn a total of 213.00 from holding Cornish Metals or generate 31.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Cornish Metals
Performance |
| Timeline |
| Ebro Foods |
| Cornish Metals |
Ebro Foods and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Cornish Metals
The main advantage of trading using opposite Ebro Foods and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| Ebro Foods vs. Aberdeen Diversified Income | Ebro Foods vs. Scottish American Investment | Ebro Foods vs. Vietnam Enterprise Investments | Ebro Foods vs. Bankers Investment Trust |
| Cornish Metals vs. Teradata Corp | Cornish Metals vs. Silver Bullet Data | Cornish Metals vs. Fidelity National Information | Cornish Metals vs. Datagroup SE |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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