Correlation Between Ebro Foods and Millenium Hotels
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Millenium Hotels 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 Millenium Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Millenium Hotels Real, you can compare the effects of market volatilities on Ebro Foods and Millenium Hotels 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 Millenium Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Millenium Hotels.
Diversification Opportunities for Ebro Foods and Millenium Hotels
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Millenium is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real 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 Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Ebro Foods i.e., Ebro Foods and Millenium Hotels go up and down completely randomly.
Pair Corralation between Ebro Foods and Millenium Hotels
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.13 times more return on investment than Millenium Hotels. However, Ebro Foods is 7.69 times less risky than Millenium Hotels. It trades about 0.03 of its potential returns per unit of risk. Millenium Hotels Real is currently generating about -0.03 per unit of risk. If you would invest 1,582 in Ebro Foods on November 2, 2024 and sell it today you would earn a total of 30.00 from holding Ebro Foods or generate 1.9% 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. Millenium Hotels Real
Performance |
| Timeline |
| Ebro Foods |
| Millenium Hotels Real |
Ebro Foods and Millenium Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Millenium Hotels
The main advantage of trading using opposite Ebro Foods and Millenium Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Millenium Hotels 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 Millenium Hotels will offset losses from the drop in Millenium Hotels' long position.| Ebro Foods vs. Viscofan | Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion |
| Millenium Hotels vs. Home Capital Rentals | Millenium Hotels vs. Arteche Lantegi Elkartea | Millenium Hotels vs. Elaia Investment Spain | Millenium Hotels vs. International Consolidated Airlines |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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