Correlation Between Ebro Foods and Gaming
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Gaming 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 Gaming 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 Gaming and Leisure, you can compare the effects of market volatilities on Ebro Foods and Gaming 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 Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Gaming.
Diversification Opportunities for Ebro Foods and Gaming
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and Gaming is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Ebro Foods i.e., Ebro Foods and Gaming go up and down completely randomly.
Pair Corralation between Ebro Foods and Gaming
Assuming the 90 days horizon Ebro Foods is expected to generate 55.22 times less return on investment than Gaming. But when comparing it to its historical volatility, Ebro Foods SA is 1.63 times less risky than Gaming. It trades about 0.0 of its potential returns per unit of risk. Gaming and Leisure is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,590 in Gaming and Leisure on October 25, 2024 and sell it today you would earn a total of 112.00 from holding Gaming and Leisure or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods SA vs. Gaming and Leisure
Performance |
| Timeline |
| Ebro Foods SA |
| Gaming and Leisure |
Ebro Foods and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Gaming
The main advantage of trading using opposite Ebro Foods and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| Ebro Foods vs. USWE SPORTS AB | Ebro Foods vs. FIH MOBILE | Ebro Foods vs. Verizon Communications | Ebro Foods vs. Highlight Communications AG |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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