Correlation Between Ebro Foods and All Iron
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and All Iron 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 All Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and All Iron Re, you can compare the effects of market volatilities on Ebro Foods and All Iron 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 All Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and All Iron.
Diversification Opportunities for Ebro Foods and All Iron
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and All is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and All Iron Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Iron Re 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 All Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Iron Re has no effect on the direction of Ebro Foods i.e., Ebro Foods and All Iron go up and down completely randomly.
Pair Corralation between Ebro Foods and All Iron
Assuming the 90 days trading horizon Ebro Foods is expected to generate 3.34 times more return on investment than All Iron. However, Ebro Foods is 3.34 times more volatile than All Iron Re. It trades about 0.11 of its potential returns per unit of risk. All Iron Re is currently generating about 0.23 per unit of risk. If you would invest 1,578 in Ebro Foods on October 26, 2024 and sell it today you would earn a total of 22.00 from holding Ebro Foods or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. All Iron Re
Performance |
| Timeline |
| Ebro Foods |
| All Iron Re |
Ebro Foods and All Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and All Iron
The main advantage of trading using opposite Ebro Foods and All Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, All Iron 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 All Iron will offset losses from the drop in All Iron's long position.| Ebro Foods vs. Viscofan | Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion |
| All Iron vs. Ebro Foods | All Iron vs. Tier1 Technology SA | All Iron vs. Neinor Homes SLU | All Iron vs. Parlem Telecom Companyia |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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