Correlation Between Ebro Foods and Deoleo SA
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Deoleo SA 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 Deoleo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Deoleo SA, you can compare the effects of market volatilities on Ebro Foods and Deoleo SA 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 Deoleo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Deoleo SA.
Diversification Opportunities for Ebro Foods and Deoleo SA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ebro and Deoleo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Deoleo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deoleo SA 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 Deoleo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deoleo SA has no effect on the direction of Ebro Foods i.e., Ebro Foods and Deoleo SA go up and down completely randomly.
Pair Corralation between Ebro Foods and Deoleo SA
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.36 times more return on investment than Deoleo SA. However, Ebro Foods is 2.78 times less risky than Deoleo SA. It trades about 0.03 of its potential returns per unit of risk. Deoleo SA is currently generating about 0.0 per unit of risk. If you would invest 1,472 in Ebro Foods on August 27, 2024 and sell it today you would earn a total of 130.00 from holding Ebro Foods or generate 8.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Deoleo SA
Performance |
| Timeline |
| Ebro Foods |
| Deoleo SA |
Ebro Foods and Deoleo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Deoleo SA
The main advantage of trading using opposite Ebro Foods and Deoleo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Deoleo SA 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 Deoleo SA will offset losses from the drop in Deoleo SA's long position.| Ebro Foods vs. Viscofan | Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion |
| Deoleo SA vs. Duro Felguera | Deoleo SA vs. Amper SA | Deoleo SA vs. Berkeley Energia Limited | Deoleo SA vs. Distribuidora Internacional de |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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