Correlation Between EBRO FOODS and CAREER EDUCATION
Can any of the company-specific risk be diversified away by investing in both EBRO FOODS and CAREER EDUCATION 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 CAREER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBRO FOODS and CAREER EDUCATION, you can compare the effects of market volatilities on EBRO FOODS and CAREER EDUCATION 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 CAREER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and CAREER EDUCATION.
Diversification Opportunities for EBRO FOODS and CAREER EDUCATION
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EBRO and CAREER is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION 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 are associated (or correlated) with CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of EBRO FOODS i.e., EBRO FOODS and CAREER EDUCATION go up and down completely randomly.
Pair Corralation between EBRO FOODS and CAREER EDUCATION
Assuming the 90 days trading horizon EBRO FOODS is expected to generate 4.7 times less return on investment than CAREER EDUCATION. But when comparing it to its historical volatility, EBRO FOODS is 2.33 times less risky than CAREER EDUCATION. It trades about 0.04 of its potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,116 in CAREER EDUCATION on October 18, 2024 and sell it today you would earn a total of 464.00 from holding CAREER EDUCATION or generate 21.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
EBRO FOODS vs. CAREER EDUCATION
Performance |
| Timeline |
| EBRO FOODS |
| CAREER EDUCATION |
EBRO FOODS and CAREER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBRO FOODS and CAREER EDUCATION
The main advantage of trading using opposite EBRO FOODS and CAREER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS position performs unexpectedly, CAREER EDUCATION 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 CAREER EDUCATION will offset losses from the drop in CAREER EDUCATION's long position.| EBRO FOODS vs. FEMALE HEALTH | EBRO FOODS vs. Direct Line Insurance | EBRO FOODS vs. Synchrony Financial | EBRO FOODS vs. MPH Health Care |
| CAREER EDUCATION vs. EAT WELL INVESTMENT | CAREER EDUCATION vs. EBRO FOODS | CAREER EDUCATION vs. PennantPark Investment | CAREER EDUCATION vs. MEDCAW INVESTMENTS LS 01 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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