Correlation Between Ebro Foods and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and XLMedia PLC 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 XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and XLMedia PLC, you can compare the effects of market volatilities on Ebro Foods and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and XLMedia PLC.
Diversification Opportunities for Ebro Foods and XLMedia PLC
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ebro and XLMedia is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Ebro Foods i.e., Ebro Foods and XLMedia PLC go up and down completely randomly.
Pair Corralation between Ebro Foods and XLMedia PLC
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.33 times more return on investment than XLMedia PLC. However, Ebro Foods is 3.01 times less risky than XLMedia PLC. It trades about 0.32 of its potential returns per unit of risk. XLMedia PLC is currently generating about -0.03 per unit of risk. If you would invest 1,608 in Ebro Foods on November 29, 2024 and sell it today you would earn a total of 71.00 from holding Ebro Foods or generate 4.42% 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. XLMedia PLC
Performance |
| Timeline |
| Ebro Foods |
| XLMedia PLC |
Ebro Foods and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and XLMedia PLC
The main advantage of trading using opposite Ebro Foods and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Ebro Foods vs. mobilezone holding AG | Ebro Foods vs. Cairo Communication SpA | Ebro Foods vs. Cellnex Telecom SA | Ebro Foods vs. Bloomsbury Publishing Plc |
| XLMedia PLC vs. Symphony Environmental Technologies | XLMedia PLC vs. Abingdon Health Plc | XLMedia PLC vs. Vitec Software Group | XLMedia PLC vs. Optima Health plc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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