Correlation Between Western Copper and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Western Copper 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 Western Copper and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and Ebro Foods SA, you can compare the effects of market volatilities on Western Copper 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 Western Copper with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Ebro Foods.
Diversification Opportunities for Western Copper and Ebro Foods
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Ebro is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA and Western Copper 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 Western Copper and 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 SA has no effect on the direction of Western Copper i.e., Western Copper and Ebro Foods go up and down completely randomly.
Pair Corralation between Western Copper and Ebro Foods
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the Ebro Foods. In addition to that, Western Copper is 3.16 times more volatile than Ebro Foods SA. It trades about -0.02 of its total potential returns per unit of risk. Ebro Foods SA is currently generating about 0.02 per unit of volatility. If you would invest 1,464 in Ebro Foods SA on October 28, 2024 and sell it today you would earn a total of 138.00 from holding Ebro Foods SA or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. Ebro Foods SA
Performance |
| Timeline |
| Western Copper |
| Ebro Foods SA |
Western Copper and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and Ebro Foods
The main advantage of trading using opposite Western Copper and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper 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.| Western Copper vs. SUN LIFE FINANCIAL | Western Copper vs. Discover Financial Services | Western Copper vs. ETFS Coffee ETC | Western Copper vs. Direct Line Insurance |
| Ebro Foods vs. General Mills | Ebro Foods vs. Danone SA | Ebro Foods vs. Hormel Foods | Ebro Foods vs. Kellogg Company |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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