Correlation Between Gaztransport and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Gaztransport 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 Gaztransport and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaztransport et Technigaz and Ebro Foods, you can compare the effects of market volatilities on Gaztransport 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 Gaztransport with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and Ebro Foods.
Diversification Opportunities for Gaztransport and Ebro Foods
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gaztransport and Ebro is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Gaztransport 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 Gaztransport et Technigaz 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 Gaztransport i.e., Gaztransport and Ebro Foods go up and down completely randomly.
Pair Corralation between Gaztransport and Ebro Foods
Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to generate 2.14 times more return on investment than Ebro Foods. However, Gaztransport is 2.14 times more volatile than Ebro Foods. It trades about 0.4 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.12 per unit of risk. If you would invest 13,730 in Gaztransport et Technigaz on November 7, 2024 and sell it today you would earn a total of 1,305 from holding Gaztransport et Technigaz or generate 9.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Gaztransport et Technigaz vs. Ebro Foods
Performance |
| Timeline |
| Gaztransport et Technigaz |
| Ebro Foods |
Gaztransport and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaztransport and Ebro Foods
The main advantage of trading using opposite Gaztransport and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport 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.| Gaztransport vs. Ryanair Holdings plc | Gaztransport vs. Ecofin Global Utilities | Gaztransport vs. Coeur Mining | Gaztransport vs. Hochschild Mining plc |
| Ebro Foods vs. Atalaya Mining | Ebro Foods vs. AMG Advanced Metallurgical | Ebro Foods vs. Norman Broadbent Plc | Ebro Foods vs. Europa Metals |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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