Correlation Between Ross Stores and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Ebro Foods SA, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Ebro Foods.
Diversification Opportunities for Ross Stores and Ebro Foods
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and Ebro is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores 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 Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and Ebro Foods go up and down completely randomly.
Pair Corralation between Ross Stores and Ebro Foods
Assuming the 90 days trading horizon Ross Stores is expected to generate 2.85 times more return on investment than Ebro Foods. However, Ross Stores is 2.85 times more volatile than Ebro Foods SA. It trades about 0.22 of its potential returns per unit of risk. Ebro Foods SA is currently generating about -0.13 per unit of risk. If you would invest 13,267 in Ross Stores on September 12, 2024 and sell it today you would earn a total of 1,539 from holding Ross Stores or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Ebro Foods SA
Performance |
| Timeline |
| Ross Stores |
| Ebro Foods SA |
Ross Stores and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Ebro Foods
The main advantage of trading using opposite Ross Stores and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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