Correlation Between Caledonia Mining and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining 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 Caledonia Mining and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Ebro Foods, you can compare the effects of market volatilities on Caledonia Mining 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 Caledonia Mining with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Ebro Foods.
Diversification Opportunities for Caledonia Mining and Ebro Foods
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caledonia and Ebro is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining i.e., Caledonia Mining and Ebro Foods go up and down completely randomly.
Pair Corralation between Caledonia Mining and Ebro Foods
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the Ebro Foods. In addition to that, Caledonia Mining is 3.14 times more volatile than Ebro Foods. It trades about -0.24 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 1,596 in Ebro Foods on September 27, 2024 and sell it today you would lose (8.00) from holding Ebro Foods or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Ebro Foods
Performance |
| Timeline |
| Caledonia Mining |
| Ebro Foods |
Caledonia Mining and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Ebro Foods
The main advantage of trading using opposite Caledonia Mining and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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.| Caledonia Mining vs. Cellnex Telecom SA | Caledonia Mining vs. Telecom Italia SpA | Caledonia Mining vs. Take Two Interactive Software | Caledonia Mining vs. Check Point Software |
| Ebro Foods vs. HCA Healthcare | Ebro Foods vs. Planet Fitness Cl | Ebro Foods vs. Naturhouse Health SA | Ebro Foods vs. Microchip Technology |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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