Correlation Between Ebro Foods and TELE2 B
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and TELE2 B 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 TELE2 B 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 TELE2 B , you can compare the effects of market volatilities on Ebro Foods and TELE2 B 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 TELE2 B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and TELE2 B.
Diversification Opportunities for Ebro Foods and TELE2 B
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ebro and TELE2 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and TELE2 B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELE2 B 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 TELE2 B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELE2 B has no effect on the direction of Ebro Foods i.e., Ebro Foods and TELE2 B go up and down completely randomly.
Pair Corralation between Ebro Foods and TELE2 B
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.62 times more return on investment than TELE2 B. However, Ebro Foods SA is 1.62 times less risky than TELE2 B. It trades about -0.11 of its potential returns per unit of risk. TELE2 B is currently generating about -0.17 per unit of risk. If you would invest 1,602 in Ebro Foods SA on September 26, 2024 and sell it today you would lose (22.00) from holding Ebro Foods SA or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods SA vs. TELE2 B
Performance |
| Timeline |
| Ebro Foods SA |
| TELE2 B |
Ebro Foods and TELE2 B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and TELE2 B
The main advantage of trading using opposite Ebro Foods and TELE2 B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, TELE2 B 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 TELE2 B will offset losses from the drop in TELE2 B's long position.| Ebro Foods vs. Mowi ASA | Ebro Foods vs. LEROY SEAFOOD GRUNSPADR | Ebro Foods vs. Lery Seafood Group | Ebro Foods vs. Nisshin Seifun Group |
| TELE2 B vs. PennyMac Mortgage Investment | TELE2 B vs. TERADATA | TELE2 B vs. Gladstone Investment | TELE2 B vs. Datadog |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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