Correlation Between Ebro Foods and Silver Mines
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Silver Mines 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 Silver Mines 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 Silver Mines Limited, you can compare the effects of market volatilities on Ebro Foods and Silver Mines 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 Silver Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Silver Mines.
Diversification Opportunities for Ebro Foods and Silver Mines
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ebro and Silver is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and Silver Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Mines Limited 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 Silver Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Mines Limited has no effect on the direction of Ebro Foods i.e., Ebro Foods and Silver Mines go up and down completely randomly.
Pair Corralation between Ebro Foods and Silver Mines
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.08 times more return on investment than Silver Mines. However, Ebro Foods SA is 12.94 times less risky than Silver Mines. It trades about -0.11 of its potential returns per unit of risk. Silver Mines Limited is currently generating about -0.06 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods SA vs. Silver Mines Limited
Performance |
| Timeline |
| Ebro Foods SA |
| Silver Mines Limited |
Ebro Foods and Silver Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Silver Mines
The main advantage of trading using opposite Ebro Foods and Silver Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Silver Mines 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 Silver Mines will offset losses from the drop in Silver Mines' 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 |
| Silver Mines vs. Entravision Communications | Silver Mines vs. HEMISPHERE EGY | Silver Mines vs. Singapore Telecommunications Limited | Silver Mines vs. PennantPark Investment |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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