Correlation Between Ebro Foods and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Imperial Brands 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 Imperial Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Imperial Brands PLC, you can compare the effects of market volatilities on Ebro Foods and Imperial Brands 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 Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Imperial Brands.
Diversification Opportunities for Ebro Foods and Imperial Brands
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ebro and Imperial is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC 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 Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of Ebro Foods i.e., Ebro Foods and Imperial Brands go up and down completely randomly.
Pair Corralation between Ebro Foods and Imperial Brands
Assuming the 90 days trading horizon Ebro Foods is expected to generate 1.37 times less return on investment than Imperial Brands. But when comparing it to its historical volatility, Ebro Foods is 1.0 times less risky than Imperial Brands. It trades about 0.15 of its potential returns per unit of risk. Imperial Brands PLC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 256,400 in Imperial Brands PLC on October 26, 2024 and sell it today you would earn a total of 6,300 from holding Imperial Brands PLC or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Imperial Brands PLC
Performance |
| Timeline |
| Ebro Foods |
| Imperial Brands PLC |
Ebro Foods and Imperial Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Imperial Brands
The main advantage of trading using opposite Ebro Foods and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' long position.| Ebro Foods vs. URU Metals | Ebro Foods vs. Mineral Financial Investments | Ebro Foods vs. FC Investment Trust | Ebro Foods vs. Central Asia Metals |
| Imperial Brands vs. Teradata Corp | Imperial Brands vs. Gruppo MutuiOnline SpA | Imperial Brands vs. Herald Investment Trust | Imperial Brands vs. Ebro Foods |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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