Correlation Between Hilton Food and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Hilton Food 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 Hilton Food and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and Ebro Foods, you can compare the effects of market volatilities on Hilton Food 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 Hilton Food with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Ebro Foods.
Diversification Opportunities for Hilton Food and Ebro Foods
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hilton and Ebro is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Hilton Food 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 Hilton Food Group 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 Hilton Food i.e., Hilton Food and Ebro Foods go up and down completely randomly.
Pair Corralation between Hilton Food and Ebro Foods
Assuming the 90 days trading horizon Hilton Food Group is expected to generate 2.55 times more return on investment than Ebro Foods. However, Hilton Food is 2.55 times more volatile than Ebro Foods. It trades about 0.07 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.02 per unit of risk. If you would invest 87,768 in Hilton Food Group on September 12, 2024 and sell it today you would earn a total of 4,632 from holding Hilton Food Group or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Food Group vs. Ebro Foods
Performance |
| Timeline |
| Hilton Food Group |
| Ebro Foods |
Hilton Food and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Food and Ebro Foods
The main advantage of trading using opposite Hilton Food and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food 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.| Hilton Food vs. MTI Wireless Edge | Hilton Food vs. AcadeMedia AB | Hilton Food vs. Fonix Mobile plc | Hilton Food vs. mobilezone holding AG |
| Ebro Foods vs. One Media iP | Ebro Foods vs. Catena Media PLC | Ebro Foods vs. Iron Mountain | Ebro Foods vs. Prosiebensat 1 Media |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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