Correlation Between Ebro Foods and Erste Group
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Erste Group 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 Erste Group 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 Erste Group Bank, you can compare the effects of market volatilities on Ebro Foods and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Erste Group.
Diversification Opportunities for Ebro Foods and Erste Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Erste is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Ebro Foods i.e., Ebro Foods and Erste Group go up and down completely randomly.
Pair Corralation between Ebro Foods and Erste Group
Assuming the 90 days horizon Ebro Foods is expected to generate 8.19 times less return on investment than Erste Group. But when comparing it to its historical volatility, Ebro Foods SA is 1.61 times less risky than Erste Group. It trades about 0.02 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,207 in Erste Group Bank on October 30, 2024 and sell it today you would earn a total of 3,023 from holding Erste Group Bank or generate 94.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.6% |
| Values | Daily Returns |
Ebro Foods SA vs. Erste Group Bank
Performance |
| Timeline |
| Ebro Foods SA |
| Erste Group Bank |
Ebro Foods and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Erste Group
The main advantage of trading using opposite Ebro Foods and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group'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 |
| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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