Correlation Between Caixabank and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Caixabank 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 Caixabank and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caixabank SA and Ebro Foods, you can compare the effects of market volatilities on Caixabank 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 Caixabank with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixabank and Ebro Foods.
Diversification Opportunities for Caixabank and Ebro Foods
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Caixabank and Ebro is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Caixabank SA and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Caixabank 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 Caixabank 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 has no effect on the direction of Caixabank i.e., Caixabank and Ebro Foods go up and down completely randomly.
Pair Corralation between Caixabank and Ebro Foods
Assuming the 90 days trading horizon Caixabank SA is expected to generate 2.57 times more return on investment than Ebro Foods. However, Caixabank is 2.57 times more volatile than Ebro Foods. It trades about 0.07 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.03 per unit of risk. If you would invest 520.00 in Caixabank SA on November 2, 2024 and sell it today you would earn a total of 64.00 from holding Caixabank SA or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caixabank SA vs. Ebro Foods
Performance |
| Timeline |
| Caixabank SA |
| Ebro Foods |
Caixabank and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caixabank and Ebro Foods
The main advantage of trading using opposite Caixabank and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixabank 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.| Caixabank vs. Banco de Sabadell | Caixabank vs. Banco Santander | Caixabank vs. Bankinter | Caixabank vs. Repsol |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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