Correlation Between Ebro Foods and NEW MILLENNIUM
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and NEW MILLENNIUM 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 NEW MILLENNIUM 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 NEW MILLENNIUM IRON, you can compare the effects of market volatilities on Ebro Foods and NEW MILLENNIUM 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 NEW MILLENNIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and NEW MILLENNIUM.
Diversification Opportunities for Ebro Foods and NEW MILLENNIUM
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and NEW is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and NEW MILLENNIUM IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW MILLENNIUM IRON 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 NEW MILLENNIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW MILLENNIUM IRON has no effect on the direction of Ebro Foods i.e., Ebro Foods and NEW MILLENNIUM go up and down completely randomly.
Pair Corralation between Ebro Foods and NEW MILLENNIUM
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.37 times more return on investment than NEW MILLENNIUM. However, Ebro Foods SA is 2.7 times less risky than NEW MILLENNIUM. It trades about -0.05 of its potential returns per unit of risk. NEW MILLENNIUM IRON is currently generating about -0.16 per unit of risk. If you would invest 1,596 in Ebro Foods SA on October 30, 2024 and sell it today you would lose (22.00) from holding Ebro Foods SA or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods SA vs. NEW MILLENNIUM IRON
Performance |
| Timeline |
| Ebro Foods SA |
| NEW MILLENNIUM IRON |
Ebro Foods and NEW MILLENNIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and NEW MILLENNIUM
The main advantage of trading using opposite Ebro Foods and NEW MILLENNIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, NEW MILLENNIUM 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 NEW MILLENNIUM will offset losses from the drop in NEW MILLENNIUM's long position.| Ebro Foods vs. MAGNUM MINING EXP | Ebro Foods vs. ETFS Coffee ETC | Ebro Foods vs. SALESFORCE INC CDR | Ebro Foods vs. GungHo Online Entertainment |
| NEW MILLENNIUM vs. Charter Communications | NEW MILLENNIUM vs. Kingdee International Software | NEW MILLENNIUM vs. MAG SILVER | NEW MILLENNIUM vs. Aya Gold Silver |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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