Correlation Between Ebro Foods and Neometals
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Neometals 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 Neometals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Neometals, you can compare the effects of market volatilities on Ebro Foods and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Neometals.
Diversification Opportunities for Ebro Foods and Neometals
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and Neometals is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Ebro Foods i.e., Ebro Foods and Neometals go up and down completely randomly.
Pair Corralation between Ebro Foods and Neometals
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.2 times more return on investment than Neometals. However, Ebro Foods is 4.95 times less risky than Neometals. It trades about 0.03 of its potential returns per unit of risk. Neometals is currently generating about -0.1 per unit of risk. If you would invest 1,421 in Ebro Foods on August 30, 2024 and sell it today you would earn a total of 172.00 from holding Ebro Foods or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ebro Foods vs. Neometals
Performance |
| Timeline |
| Ebro Foods |
| Neometals |
Ebro Foods and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Neometals
The main advantage of trading using opposite Ebro Foods and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| Ebro Foods vs. Lendinvest PLC | Ebro Foods vs. Neometals | Ebro Foods vs. Albion Technology General | Ebro Foods vs. Jupiter Fund Management |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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