Correlation Between LG Display and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both LG Display 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 LG Display and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Ebro Foods SA, you can compare the effects of market volatilities on LG Display 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 LG Display with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Ebro Foods.
Diversification Opportunities for LG Display and Ebro Foods
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between LGA and Ebro is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co 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 LG Display 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 LG Display Co 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 LG Display i.e., LG Display and Ebro Foods go up and down completely randomly.
Pair Corralation between LG Display and Ebro Foods
Assuming the 90 days horizon LG Display Co is expected to under-perform the Ebro Foods. In addition to that, LG Display is 2.17 times more volatile than Ebro Foods SA. It trades about -0.08 of its total potential returns per unit of risk. Ebro Foods SA is currently generating about 0.02 per unit of volatility. If you would invest 1,544 in Ebro Foods SA on September 29, 2024 and sell it today you would earn a total of 36.00 from holding Ebro Foods SA or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Ebro Foods SA
Performance |
| Timeline |
| LG Display |
| Ebro Foods SA |
LG Display and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Ebro Foods
The main advantage of trading using opposite LG Display and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display 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.| LG Display vs. Chesapeake Utilities | LG Display vs. Insurance Australia Group | LG Display vs. SBI Insurance Group | LG Display vs. UNITED UTILITIES GR |
| Ebro Foods vs. Mowi ASA | Ebro Foods vs. LEROY SEAFOOD GRUNSPADR | Ebro Foods vs. Lery Seafood Group | Ebro Foods vs. Nisshin Seifun Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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