Correlation Between Ebro Foods and EJF Investments
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and EJF Investments 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 EJF Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and EJF Investments, you can compare the effects of market volatilities on Ebro Foods and EJF Investments 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 EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and EJF Investments.
Diversification Opportunities for Ebro Foods and EJF Investments
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and EJF is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Ebro Foods i.e., Ebro Foods and EJF Investments go up and down completely randomly.
Pair Corralation between Ebro Foods and EJF Investments
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.43 times more return on investment than EJF Investments. However, Ebro Foods is 2.31 times less risky than EJF Investments. It trades about 0.12 of its potential returns per unit of risk. EJF Investments is currently generating about 0.01 per unit of risk. If you would invest 1,576 in Ebro Foods on October 28, 2024 and sell it today you would earn a total of 26.00 from holding Ebro Foods or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. EJF Investments
Performance |
| Timeline |
| Ebro Foods |
| EJF Investments |
Ebro Foods and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and EJF Investments
The main advantage of trading using opposite Ebro Foods and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' long position.| Ebro Foods vs. Monster Beverage Corp | Ebro Foods vs. Beowulf Mining | Ebro Foods vs. Creo Medical Group | Ebro Foods vs. Advanced Medical Solutions |
| EJF Investments vs. Pressure Technologies Plc | EJF Investments vs. Diversified Energy | EJF Investments vs. Eneraqua Technologies PLC | EJF Investments vs. Lindsell Train Investment |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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