Correlation Between Ebro Foods and Merlin Properties
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Merlin Properties 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 Merlin Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Merlin Properties SOCIMI, you can compare the effects of market volatilities on Ebro Foods and Merlin Properties 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 Merlin Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Merlin Properties.
Diversification Opportunities for Ebro Foods and Merlin Properties
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Merlin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Merlin Properties SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merlin Properties SOCIMI 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 Merlin Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merlin Properties SOCIMI has no effect on the direction of Ebro Foods i.e., Ebro Foods and Merlin Properties go up and down completely randomly.
Pair Corralation between Ebro Foods and Merlin Properties
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.37 times more return on investment than Merlin Properties. However, Ebro Foods is 2.67 times less risky than Merlin Properties. It trades about -0.05 of its potential returns per unit of risk. Merlin Properties SOCIMI is currently generating about -0.07 per unit of risk. If you would invest 1,614 in Ebro Foods on August 28, 2024 and sell it today you would lose (16.00) from holding Ebro Foods or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Merlin Properties SOCIMI
Performance |
| Timeline |
| Ebro Foods |
| Merlin Properties SOCIMI |
Ebro Foods and Merlin Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Merlin Properties
The main advantage of trading using opposite Ebro Foods and Merlin Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Merlin Properties 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 Merlin Properties will offset losses from the drop in Merlin Properties' long position.| Ebro Foods vs. Viscofan | Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion |
| Merlin Properties vs. All Iron Re | Merlin Properties vs. Hispanotels Inversiones SOCIMI | Merlin Properties vs. Ebro Foods | Merlin Properties vs. Bankinter |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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