Correlation Between European Metals and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both European Metals and Ebro Foods 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 European Metals and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Ebro Foods, you can compare the effects of market volatilities on European Metals and Ebro Foods 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 European Metals with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Ebro Foods.
Diversification Opportunities for European Metals and Ebro Foods
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between European and Ebro is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and European Metals 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 European Metals Holdings are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of European Metals i.e., European Metals and Ebro Foods go up and down completely randomly.
Pair Corralation between European Metals and Ebro Foods
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Ebro Foods. In addition to that, European Metals is 3.65 times more volatile than Ebro Foods. It trades about -0.37 of its total potential returns per unit of risk. Ebro Foods is currently generating about -0.05 per unit of volatility. If you would invest 1,616 in Ebro Foods on August 28, 2024 and sell it today you would lose (12.00) from holding Ebro Foods or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
European Metals Holdings vs. Ebro Foods
Performance |
| Timeline |
| European Metals Holdings |
| Ebro Foods |
European Metals and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Ebro Foods
The main advantage of trading using opposite European Metals and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| European Metals vs. Givaudan SA | European Metals vs. Antofagasta PLC | European Metals vs. Centamin PLC | European Metals vs. Atalaya Mining |
| Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Hyundai Motor | Ebro Foods vs. Toyota Motor Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |