Correlation Between Bodegas Riojanas and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Bodegas Riojanas 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 Bodegas Riojanas and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bodegas Riojanas SA and Ebro Foods, you can compare the effects of market volatilities on Bodegas Riojanas 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 Bodegas Riojanas with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bodegas Riojanas and Ebro Foods.
Diversification Opportunities for Bodegas Riojanas and Ebro Foods
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bodegas and Ebro is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bodegas Riojanas SA and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Bodegas Riojanas 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 Bodegas Riojanas SA 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 Bodegas Riojanas i.e., Bodegas Riojanas and Ebro Foods go up and down completely randomly.
Pair Corralation between Bodegas Riojanas and Ebro Foods
Assuming the 90 days trading horizon Bodegas Riojanas SA is expected to under-perform the Ebro Foods. In addition to that, Bodegas Riojanas is 2.31 times more volatile than Ebro Foods. It trades about -0.14 of its total potential returns per unit of risk. Ebro Foods is currently generating about 0.02 per unit of volatility. If you would invest 1,590 in Ebro Foods on September 2, 2024 and sell it today you would earn a total of 10.00 from holding Ebro Foods or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bodegas Riojanas SA vs. Ebro Foods
Performance |
| Timeline |
| Bodegas Riojanas |
| Ebro Foods |
Bodegas Riojanas and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bodegas Riojanas and Ebro Foods
The main advantage of trading using opposite Bodegas Riojanas and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bodegas Riojanas 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.| Bodegas Riojanas vs. International Consolidated Airlines | Bodegas Riojanas vs. Labiana Health SA | Bodegas Riojanas vs. Melia Hotels | Bodegas Riojanas vs. Tier1 Technology SA |
| Ebro Foods vs. Viscofan | Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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