Correlation Between EBRO FOODS and Patrick Industries
Can any of the company-specific risk be diversified away by investing in both EBRO FOODS and Patrick Industries 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 Patrick Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBRO FOODS and Patrick Industries, you can compare the effects of market volatilities on EBRO FOODS and Patrick Industries 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 Patrick Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and Patrick Industries.
Diversification Opportunities for EBRO FOODS and Patrick Industries
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EBRO and Patrick is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and Patrick Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patrick Industries 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 Patrick Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patrick Industries has no effect on the direction of EBRO FOODS i.e., EBRO FOODS and Patrick Industries go up and down completely randomly.
Pair Corralation between EBRO FOODS and Patrick Industries
Assuming the 90 days trading horizon EBRO FOODS is expected to generate 13.18 times less return on investment than Patrick Industries. But when comparing it to its historical volatility, EBRO FOODS is 2.33 times less risky than Patrick Industries. It trades about 0.02 of its potential returns per unit of risk. Patrick Industries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,467 in Patrick Industries on November 1, 2024 and sell it today you would earn a total of 833.00 from holding Patrick Industries or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EBRO FOODS vs. Patrick Industries
Performance |
| Timeline |
| EBRO FOODS |
| Patrick Industries |
EBRO FOODS and Patrick Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBRO FOODS and Patrick Industries
The main advantage of trading using opposite EBRO FOODS and Patrick Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS position performs unexpectedly, Patrick Industries 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 Patrick Industries will offset losses from the drop in Patrick Industries' long position.| EBRO FOODS vs. Direct Line Insurance | EBRO FOODS vs. Synovus Financial Corp | EBRO FOODS vs. Virtu Financial | EBRO FOODS vs. CHIBA BANK |
| Patrick Industries vs. Harley Davidson | Patrick Industries vs. Fox Factory Holding | Patrick Industries vs. Thor Industries | Patrick Industries vs. LCI Industries |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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