Correlation Between Danone SA and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Danone SA 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 Danone SA and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and Ebro Foods SA, you can compare the effects of market volatilities on Danone SA 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 Danone SA with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and Ebro Foods.
Diversification Opportunities for Danone SA and Ebro Foods
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Danone and Ebro is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA and Danone SA 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 Danone SA 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 SA has no effect on the direction of Danone SA i.e., Danone SA and Ebro Foods go up and down completely randomly.
Pair Corralation between Danone SA and Ebro Foods
Assuming the 90 days horizon Danone SA is expected to generate 0.89 times more return on investment than Ebro Foods. However, Danone SA is 1.13 times less risky than Ebro Foods. It trades about 0.05 of its potential returns per unit of risk. Ebro Foods SA is currently generating about 0.02 per unit of risk. If you would invest 6,286 in Danone SA on September 2, 2024 and sell it today you would earn a total of 164.00 from holding Danone SA or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danone SA vs. Ebro Foods SA
Performance |
| Timeline |
| Danone SA |
| Ebro Foods SA |
Danone SA and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and Ebro Foods
The main advantage of trading using opposite Danone SA and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA 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.| Danone SA vs. Superior Plus Corp | Danone SA vs. NMI Holdings | Danone SA vs. Origin Agritech | Danone SA vs. SIVERS SEMICONDUCTORS AB |
| Ebro Foods vs. Danone SA | Ebro Foods vs. Superior Plus Corp | Ebro Foods vs. NMI Holdings | Ebro Foods vs. Origin Agritech |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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