Correlation Between PG E and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both PG E 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 PG E and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PG E P6 and Ebro Foods SA, you can compare the effects of market volatilities on PG E 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 PG E with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of PG E and Ebro Foods.
Diversification Opportunities for PG E and Ebro Foods
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PCG6 and Ebro is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PG E P6 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 PG E 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 PG E P6 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 PG E i.e., PG E and Ebro Foods go up and down completely randomly.
Pair Corralation between PG E and Ebro Foods
Assuming the 90 days trading horizon PG E P6 is expected to generate 1.52 times more return on investment than Ebro Foods. However, PG E is 1.52 times more volatile than Ebro Foods SA. It trades about 0.05 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 1,612 in PG E P6 on September 4, 2024 and sell it today you would earn a total of 548.00 from holding PG E P6 or generate 34.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
PG E P6 vs. Ebro Foods SA
Performance |
| Timeline |
| PG E P6 |
| Ebro Foods SA |
PG E and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PG E and Ebro Foods
The main advantage of trading using opposite PG E and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PG E 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.| PG E vs. Globe Trade Centre | PG E vs. Axway Software SA | PG E vs. FAST RETAIL ADR | PG E vs. TRADEDOUBLER AB SK |
| Ebro Foods vs. Nestl SA | Ebro Foods vs. Kraft Heinz Co | Ebro Foods vs. General Mills | Ebro Foods vs. Kellogg Company |
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.
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