Correlation Between Ebro Foods and Bankinter
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Bankinter 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 Ebro Foods and Bankinter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Bankinter, you can compare the effects of market volatilities on Ebro Foods and Bankinter 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 Ebro Foods with a short position of Bankinter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Bankinter.
Diversification Opportunities for Ebro Foods and Bankinter
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ebro and Bankinter is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Bankinter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter and Ebro Foods 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 Ebro Foods are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter has no effect on the direction of Ebro Foods i.e., Ebro Foods and Bankinter go up and down completely randomly.
Pair Corralation between Ebro Foods and Bankinter
Assuming the 90 days trading horizon Ebro Foods is expected to under-perform the Bankinter. But the stock apears to be less risky and, when comparing its historical volatility, Ebro Foods is 2.33 times less risky than Bankinter. The stock trades about -0.15 of its potential returns per unit of risk. The Bankinter is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 759.00 in Bankinter on August 24, 2024 and sell it today you would earn a total of 13.00 from holding Bankinter or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Bankinter
Performance |
| Timeline |
| Ebro Foods |
| Bankinter |
Ebro Foods and Bankinter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Bankinter
The main advantage of trading using opposite Ebro Foods and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Bankinter 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 Bankinter will offset losses from the drop in Bankinter's long position.| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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