Correlation Between Kaufman Broad and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Kaufman Broad 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 Kaufman Broad and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaufman Broad SA and Ebro Foods SA, you can compare the effects of market volatilities on Kaufman Broad 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 Kaufman Broad with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaufman Broad and Ebro Foods.
Diversification Opportunities for Kaufman Broad and Ebro Foods
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaufman and Ebro is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA 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 Kaufman Broad 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 Kaufman Broad SA 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 Kaufman Broad i.e., Kaufman Broad and Ebro Foods go up and down completely randomly.
Pair Corralation between Kaufman Broad and Ebro Foods
Assuming the 90 days horizon Kaufman Broad SA is expected to generate 1.89 times more return on investment than Ebro Foods. However, Kaufman Broad is 1.89 times more volatile than Ebro Foods SA. It trades about 0.08 of its potential returns per unit of risk. Ebro Foods SA is currently generating about 0.02 per unit of risk. If you would invest 2,670 in Kaufman Broad SA on September 29, 2024 and sell it today you would earn a total of 500.00 from holding Kaufman Broad SA or generate 18.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaufman Broad SA vs. Ebro Foods SA
Performance |
| Timeline |
| Kaufman Broad SA |
| Ebro Foods SA |
Kaufman Broad and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaufman Broad and Ebro Foods
The main advantage of trading using opposite Kaufman Broad and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaufman Broad 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.| Kaufman Broad vs. HANOVER INSURANCE | Kaufman Broad vs. Infrastrutture Wireless Italiane | Kaufman Broad vs. Tower One Wireless | Kaufman Broad vs. CENTURIA OFFICE REIT |
| Ebro Foods vs. Mowi ASA | Ebro Foods vs. LEROY SEAFOOD GRUNSPADR | Ebro Foods vs. Lery Seafood Group | Ebro Foods vs. Nisshin Seifun Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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