Correlation Between Big Yellow and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Big Yellow 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 Big Yellow and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Yellow Group and Ebro Foods, you can compare the effects of market volatilities on Big Yellow 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 Big Yellow with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Yellow and Ebro Foods.
Diversification Opportunities for Big Yellow and Ebro Foods
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and Ebro is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Big Yellow Group and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Big Yellow 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 Big Yellow Group 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 Big Yellow i.e., Big Yellow and Ebro Foods go up and down completely randomly.
Pair Corralation between Big Yellow and Ebro Foods
Assuming the 90 days trading horizon Big Yellow is expected to generate 6.15 times less return on investment than Ebro Foods. In addition to that, Big Yellow is 2.06 times more volatile than Ebro Foods. It trades about 0.0 of its total potential returns per unit of risk. Ebro Foods is currently generating about 0.04 per unit of volatility. If you would invest 1,404 in Ebro Foods on September 5, 2024 and sell it today you would earn a total of 191.00 from holding Ebro Foods or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Yellow Group vs. Ebro Foods
Performance |
| Timeline |
| Big Yellow Group |
| Ebro Foods |
Big Yellow and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Yellow and Ebro Foods
The main advantage of trading using opposite Big Yellow and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Yellow 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.| Big Yellow vs. Ebro Foods | Big Yellow vs. Roebuck Food Group | Big Yellow vs. Kinnevik Investment AB | Big Yellow vs. Home Depot |
| Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Hyundai Motor | Ebro Foods vs. Toyota Motor Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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