Correlation Between Ebro Foods and National Beverage
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and National Beverage 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 Ebro Foods and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods SA and National Beverage Corp, you can compare the effects of market volatilities on Ebro Foods and National Beverage 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 Ebro Foods with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and National Beverage.
Diversification Opportunities for Ebro Foods and National Beverage
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ebro and National is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Ebro 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 Ebro Foods SA are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Ebro Foods i.e., Ebro Foods and National Beverage go up and down completely randomly.
Pair Corralation between Ebro Foods and National Beverage
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.41 times more return on investment than National Beverage. However, Ebro Foods SA is 2.44 times less risky than National Beverage. It trades about -0.05 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.04 per unit of risk. If you would invest 1,602 in Ebro Foods SA on September 13, 2024 and sell it today you would lose (14.00) from holding Ebro Foods SA or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods SA vs. National Beverage Corp
Performance |
| Timeline |
| Ebro Foods SA |
| National Beverage Corp |
Ebro Foods and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and National Beverage
The main advantage of trading using opposite Ebro Foods and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Ebro Foods vs. Thai Beverage Public | Ebro Foods vs. Warner Music Group | Ebro Foods vs. QURATE RETAIL INC | Ebro Foods vs. Vastned Retail NV |
| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. NorAm Drilling AS | National Beverage vs. Norsk Hydro ASA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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