Correlation Between Easy Software and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Easy Software 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 Easy Software and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and Ebro Foods SA, you can compare the effects of market volatilities on Easy Software 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 Easy Software with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and Ebro Foods.
Diversification Opportunities for Easy Software and Ebro Foods
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Easy and Ebro is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA and Easy Software 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 Easy Software AG 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 SA has no effect on the direction of Easy Software i.e., Easy Software and Ebro Foods go up and down completely randomly.
Pair Corralation between Easy Software and Ebro Foods
Assuming the 90 days trading horizon Easy Software AG is expected to generate 3.03 times more return on investment than Ebro Foods. However, Easy Software is 3.03 times more volatile than Ebro Foods SA. It trades about 0.13 of its potential returns per unit of risk. Ebro Foods SA is currently generating about -0.03 per unit of risk. If you would invest 1,470 in Easy Software AG on November 6, 2024 and sell it today you would earn a total of 330.00 from holding Easy Software AG or generate 22.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Easy Software AG vs. Ebro Foods SA
Performance |
| Timeline |
| Easy Software AG |
| Ebro Foods SA |
Easy Software and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and Ebro Foods
The main advantage of trading using opposite Easy Software and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software 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.| Easy Software vs. ARISTOCRAT LEISURE | Easy Software vs. PLAYTECH | Easy Software vs. PLAYSTUDIOS A DL 0001 | Easy Software vs. Gaming and Leisure |
| Ebro Foods vs. SINGAPORE AIRLINES | Ebro Foods vs. Gol Intelligent Airlines | Ebro Foods vs. Tradegate AG Wertpapierhandelsbank | Ebro Foods vs. China Eastern 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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