Correlation Between LION ONE and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and Ebro Foods SA, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Ebro Foods.
Diversification Opportunities for LION ONE and Ebro Foods
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LION and Ebro is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS 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 LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and Ebro Foods go up and down completely randomly.
Pair Corralation between LION ONE and Ebro Foods
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Ebro Foods. In addition to that, LION ONE is 6.55 times more volatile than Ebro Foods SA. It trades about -0.15 of its total potential returns per unit of risk. Ebro Foods SA is currently generating about 0.04 per unit of volatility. If you would invest 1,572 in Ebro Foods SA on September 14, 2024 and sell it today you would earn a total of 8.00 from holding Ebro Foods SA or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. Ebro Foods SA
Performance |
| Timeline |
| LION ONE METALS |
| Ebro Foods SA |
LION ONE and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and Ebro Foods
The main advantage of trading using opposite LION ONE and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.The idea behind LION ONE METALS and Ebro Foods SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ebro Foods vs. Hormel Foods | Ebro Foods vs. Superior Plus Corp | Ebro Foods vs. SIVERS SEMICONDUCTORS AB | Ebro Foods vs. NorAm Drilling AS |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |