Correlation Between Cembra Money and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Cembra Money and Ebro Foods 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 Cembra Money and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cembra Money Bank and Ebro Foods, you can compare the effects of market volatilities on Cembra Money and Ebro Foods 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 Cembra Money with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and Ebro Foods.
Diversification Opportunities for Cembra Money and Ebro Foods
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cembra and Ebro is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Cembra Money 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 Cembra Money Bank are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of Cembra Money i.e., Cembra Money and Ebro Foods go up and down completely randomly.
Pair Corralation between Cembra Money and Ebro Foods
Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 1.35 times more return on investment than Ebro Foods. However, Cembra Money is 1.35 times more volatile than Ebro Foods. It trades about 0.34 of its potential returns per unit of risk. Ebro Foods is currently generating about -0.11 per unit of risk. If you would invest 8,230 in Cembra Money Bank on October 15, 2024 and sell it today you would earn a total of 350.00 from holding Cembra Money Bank or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cembra Money Bank vs. Ebro Foods
Performance |
| Timeline |
| Cembra Money Bank |
| Ebro Foods |
Cembra Money and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cembra Money and Ebro Foods
The main advantage of trading using opposite Cembra Money and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| Cembra Money vs. Spirent Communications plc | Cembra Money vs. Verizon Communications | Cembra Money vs. Aeorema Communications Plc | Cembra Money vs. Omega Healthcare Investors |
| Ebro Foods vs. Edita Food Industries | Ebro Foods vs. Cornish Metals | Ebro Foods vs. European Metals Holdings | Ebro Foods vs. Jacquet Metal Service |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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