Correlation Between Patrick Industries and EBRO FOODS
Can any of the company-specific risk be diversified away by investing in both Patrick Industries 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 Patrick Industries and EBRO FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patrick Industries and EBRO FOODS, you can compare the effects of market volatilities on Patrick Industries 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 Patrick Industries with a short position of EBRO FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patrick Industries and EBRO FOODS.
Diversification Opportunities for Patrick Industries and EBRO FOODS
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Patrick and EBRO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Patrick Industries and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS and Patrick Industries 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 Patrick Industries 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 Patrick Industries i.e., Patrick Industries and EBRO FOODS go up and down completely randomly.
Pair Corralation between Patrick Industries and EBRO FOODS
Assuming the 90 days horizon Patrick Industries is expected to generate 2.18 times more return on investment than EBRO FOODS. However, Patrick Industries is 2.18 times more volatile than EBRO FOODS. It trades about 0.32 of its potential returns per unit of risk. EBRO FOODS is currently generating about 0.12 per unit of risk. If you would invest 8,050 in Patrick Industries on November 8, 2024 and sell it today you would earn a total of 1,350 from holding Patrick Industries or generate 16.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patrick Industries vs. EBRO FOODS
Performance |
| Timeline |
| Patrick Industries |
| EBRO FOODS |
Patrick Industries and EBRO FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patrick Industries and EBRO FOODS
The main advantage of trading using opposite Patrick Industries and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patrick Industries 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's long position.| Patrick Industries vs. STMicroelectronics NV | Patrick Industries vs. Delta Electronics Public | Patrick Industries vs. STMICROELECTRONICS | Patrick Industries vs. TT Electronics PLC |
| EBRO FOODS vs. 24SEVENOFFICE GROUP AB | EBRO FOODS vs. VIVA WINE GROUP | EBRO FOODS vs. ITALIAN WINE BRANDS | EBRO FOODS vs. NTG Nordic Transport |
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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