Correlation Between Foodlink and Eurobank Ergasias
Can any of the company-specific risk be diversified away by investing in both Foodlink and Eurobank Ergasias 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 Foodlink and Eurobank Ergasias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foodlink AE and Eurobank Ergasias Services, you can compare the effects of market volatilities on Foodlink and Eurobank Ergasias 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 Foodlink with a short position of Eurobank Ergasias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foodlink and Eurobank Ergasias.
Diversification Opportunities for Foodlink and Eurobank Ergasias
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Foodlink and Eurobank is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Foodlink AE and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Foodlink 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 Foodlink AE are associated (or correlated) with Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Foodlink i.e., Foodlink and Eurobank Ergasias go up and down completely randomly.
Pair Corralation between Foodlink and Eurobank Ergasias
Assuming the 90 days trading horizon Foodlink AE is expected to generate 2.15 times more return on investment than Eurobank Ergasias. However, Foodlink is 2.15 times more volatile than Eurobank Ergasias Services. It trades about 0.17 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.23 per unit of risk. If you would invest 33.00 in Foodlink AE on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Foodlink AE or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foodlink AE vs. Eurobank Ergasias Services
Performance |
| Timeline |
| Foodlink AE |
| Eurobank Ergasias |
Foodlink and Eurobank Ergasias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foodlink and Eurobank Ergasias
The main advantage of trading using opposite Foodlink and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foodlink position performs unexpectedly, Eurobank Ergasias 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 Eurobank Ergasias will offset losses from the drop in Eurobank Ergasias' long position.| Foodlink vs. Frigoglass SAIC | Foodlink vs. Autohellas SA | Foodlink vs. Public Power | Foodlink vs. Intralot SA Integrated |
| Eurobank Ergasias vs. National Bank of | Eurobank Ergasias vs. EL D Mouzakis | Eurobank Ergasias vs. Lampsa Hellenic Hotels | Eurobank Ergasias vs. Alpha Trust Mutual |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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