Correlation Between Bankinter and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Bankinter and Ebro Foods 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 Bankinter and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankinter and Ebro Foods, you can compare the effects of market volatilities on Bankinter and Ebro Foods 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 Bankinter with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankinter and Ebro Foods.
Diversification Opportunities for Bankinter and Ebro Foods
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bankinter and Ebro is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Bankinter 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 Bankinter are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of Bankinter i.e., Bankinter and Ebro Foods go up and down completely randomly.
Pair Corralation between Bankinter and Ebro Foods
Assuming the 90 days trading horizon Bankinter is expected to generate 2.03 times more return on investment than Ebro Foods. However, Bankinter is 2.03 times more volatile than Ebro Foods. It trades about 0.1 of its potential returns per unit of risk. Ebro Foods is currently generating about -0.05 per unit of risk. If you would invest 738.00 in Bankinter on August 28, 2024 and sell it today you would earn a total of 28.00 from holding Bankinter or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankinter vs. Ebro Foods
Performance |
| Timeline |
| Bankinter |
| Ebro Foods |
Bankinter and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankinter and Ebro Foods
The main advantage of trading using opposite Bankinter and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankinter position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.The idea behind Bankinter and Ebro Foods 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.| Ebro Foods vs. Viscofan | Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |