Correlation Between Ebro Foods and SOS
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and SOS 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 SOS 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 SOS LTD A, you can compare the effects of market volatilities on Ebro Foods and SOS 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 SOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and SOS.
Diversification Opportunities for Ebro Foods and SOS
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ebro and SOS is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and SOS LTD A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS LTD A 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 SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS LTD A has no effect on the direction of Ebro Foods i.e., Ebro Foods and SOS go up and down completely randomly.
Pair Corralation between Ebro Foods and SOS
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.03 times more return on investment than SOS. However, Ebro Foods SA is 32.09 times less risky than SOS. It trades about -0.02 of its potential returns per unit of risk. SOS LTD A is currently generating about -0.01 per unit of risk. If you would invest 1,584 in Ebro Foods SA on September 16, 2024 and sell it today you would lose (4.00) from holding Ebro Foods SA or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ebro Foods SA vs. SOS LTD A
Performance |
| Timeline |
| Ebro Foods SA |
| SOS LTD A |
Ebro Foods and SOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and SOS
The main advantage of trading using opposite Ebro Foods and SOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, SOS 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 SOS will offset losses from the drop in SOS's long position.| Ebro Foods vs. Hormel Foods | Ebro Foods vs. Superior Plus Corp | Ebro Foods vs. SIVERS SEMICONDUCTORS AB | Ebro Foods vs. NorAm Drilling AS |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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