Correlation Between Ebro Foods and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and JLEN Environmental 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 JLEN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and JLEN Environmental Assets, you can compare the effects of market volatilities on Ebro Foods and JLEN Environmental 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 JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and JLEN Environmental.
Diversification Opportunities for Ebro Foods and JLEN Environmental
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and JLEN is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Ebro Foods i.e., Ebro Foods and JLEN Environmental go up and down completely randomly.
Pair Corralation between Ebro Foods and JLEN Environmental
Assuming the 90 days trading horizon Ebro Foods is expected to generate 4.5 times less return on investment than JLEN Environmental. But when comparing it to its historical volatility, Ebro Foods is 1.69 times less risky than JLEN Environmental. It trades about 0.09 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 6,730 in JLEN Environmental Assets on December 4, 2024 and sell it today you would earn a total of 430.00 from holding JLEN Environmental Assets or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. JLEN Environmental Assets
Performance |
| Timeline |
| Ebro Foods |
| JLEN Environmental Assets |
Ebro Foods and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and JLEN Environmental
The main advantage of trading using opposite Ebro Foods and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| Ebro Foods vs. Edinburgh Investment Trust | Ebro Foods vs. Aurora Investment Trust | Ebro Foods vs. BlackRock Frontiers Investment | Ebro Foods vs. Vietnam Enterprise Investments |
| JLEN Environmental vs. Cornish Metals | JLEN Environmental vs. Empire Metals Limited | JLEN Environmental vs. Sabre Insurance Group | JLEN Environmental vs. Vienna Insurance Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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