Correlation Between Collins Foods and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Collins Foods 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 Collins Foods and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods Limited and Ebro Foods SA, you can compare the effects of market volatilities on Collins Foods 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 Collins Foods with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Ebro Foods.
Diversification Opportunities for Collins Foods and Ebro Foods
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Collins and Ebro is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited 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 Collins 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 Collins Foods Limited 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 Collins Foods i.e., Collins Foods and Ebro Foods go up and down completely randomly.
Pair Corralation between Collins Foods and Ebro Foods
Assuming the 90 days horizon Collins Foods Limited is expected to under-perform the Ebro Foods. In addition to that, Collins Foods is 1.73 times more volatile than Ebro Foods SA. It trades about -0.45 of its total potential returns per unit of risk. Ebro Foods SA is currently generating about -0.04 per unit of volatility. If you would invest 1,574 in Ebro Foods SA on September 22, 2024 and sell it today you would lose (10.00) from holding Ebro Foods SA or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods Limited vs. Ebro Foods SA
Performance |
| Timeline |
| Collins Foods Limited |
| Ebro Foods SA |
Collins Foods and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Ebro Foods
The main advantage of trading using opposite Collins Foods and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods 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.| Collins Foods vs. Fukuyama Transporting Co | Collins Foods vs. Gold Road Resources | Collins Foods vs. SMA Solar Technology | Collins Foods vs. Air Transport Services |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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