Correlation Between Ebro Foods and LION ONE
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on Ebro Foods and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and LION ONE.
Diversification Opportunities for Ebro Foods and LION ONE
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ebro and LION is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Ebro Foods i.e., Ebro Foods and LION ONE go up and down completely randomly.
Pair Corralation between Ebro Foods and LION ONE
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.15 times more return on investment than LION ONE. However, Ebro Foods SA is 6.55 times less risky than LION ONE. It trades about 0.04 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.15 per unit of risk. If you would invest 1,572 in Ebro Foods SA on September 14, 2024 and sell it today you would earn a total of 8.00 from holding Ebro Foods SA or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods SA vs. LION ONE METALS
Performance |
| Timeline |
| Ebro Foods SA |
| LION ONE METALS |
Ebro Foods and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and LION ONE
The main advantage of trading using opposite Ebro Foods and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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