Correlation Between Ebro Foods and Infrastrutture Wireless
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Infrastrutture Wireless 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 Infrastrutture Wireless 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 Infrastrutture Wireless Italiane, you can compare the effects of market volatilities on Ebro Foods and Infrastrutture Wireless 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 Infrastrutture Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Infrastrutture Wireless.
Diversification Opportunities for Ebro Foods and Infrastrutture Wireless
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Infrastrutture is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and Infrastrutture Wireless Italia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastrutture Wireless 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 Infrastrutture Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastrutture Wireless has no effect on the direction of Ebro Foods i.e., Ebro Foods and Infrastrutture Wireless go up and down completely randomly.
Pair Corralation between Ebro Foods and Infrastrutture Wireless
Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.86 times more return on investment than Infrastrutture Wireless. However, Ebro Foods SA is 1.16 times less risky than Infrastrutture Wireless. It trades about -0.14 of its potential returns per unit of risk. Infrastrutture Wireless Italiane is currently generating about -0.2 per unit of risk. If you would invest 1,638 in Ebro Foods SA on September 5, 2024 and sell it today you would lose (54.00) from holding Ebro Foods SA or give up 3.3% 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. Infrastrutture Wireless Italia
Performance |
| Timeline |
| Ebro Foods SA |
| Infrastrutture Wireless |
Ebro Foods and Infrastrutture Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Infrastrutture Wireless
The main advantage of trading using opposite Ebro Foods and Infrastrutture Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Infrastrutture Wireless 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 Infrastrutture Wireless will offset losses from the drop in Infrastrutture Wireless' long position.The idea behind Ebro Foods SA and Infrastrutture Wireless Italiane pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Infrastrutture Wireless vs. Larsen Toubro Limited | Infrastrutture Wireless vs. China Railway Group | Infrastrutture Wireless vs. Superior Plus Corp | Infrastrutture Wireless vs. NMI Holdings |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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