Correlation Between Ebro Foods and IBEX 35
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and IBEX 35 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 IBEX 35 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and IBEX 35 Index, you can compare the effects of market volatilities on Ebro Foods and IBEX 35 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 IBEX 35. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and IBEX 35.
Diversification Opportunities for Ebro Foods and IBEX 35
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ebro and IBEX is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and IBEX 35 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBEX 35 Index 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 IBEX 35. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBEX 35 Index has no effect on the direction of Ebro Foods i.e., Ebro Foods and IBEX 35 go up and down completely randomly.
Pair Corralation between Ebro Foods and IBEX 35
Assuming the 90 days trading horizon Ebro Foods is expected to generate 3.41 times less return on investment than IBEX 35. But when comparing it to its historical volatility, Ebro Foods is 1.18 times less risky than IBEX 35. It trades about 0.06 of its potential returns per unit of risk. IBEX 35 Index is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,039,050 in IBEX 35 Index on November 4, 2024 and sell it today you would earn a total of 197,840 from holding IBEX 35 Index or generate 19.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Ebro Foods vs. IBEX 35 Index
Performance |
| Timeline |
Ebro Foods and IBEX 35 Volatility Contrast
Predicted Return Density |
| Returns |
Ebro Foods
Pair trading matchups for Ebro Foods
IBEX 35 Index
Pair trading matchups for IBEX 35
Pair Trading with Ebro Foods and IBEX 35
The main advantage of trading using opposite Ebro Foods and IBEX 35 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, IBEX 35 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 IBEX 35 will offset losses from the drop in IBEX 35's long position.| Ebro Foods vs. Viscofan | Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion |
| IBEX 35 vs. Parlem Telecom Companyia | IBEX 35 vs. International Consolidated Airlines | IBEX 35 vs. Aedas Homes SL | IBEX 35 vs. Inhome Prime Properties |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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