Correlation Between Spirent Communications and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Ebro Foods, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Ebro Foods.
Diversification Opportunities for Spirent Communications and Ebro Foods
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and Ebro is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Ebro Foods go up and down completely randomly.
Pair Corralation between Spirent Communications and Ebro Foods
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 4.67 times more return on investment than Ebro Foods. However, Spirent Communications is 4.67 times more volatile than Ebro Foods. It trades about 0.01 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.02 per unit of risk. If you would invest 21,546 in Spirent Communications plc on November 2, 2024 and sell it today you would lose (3,396) from holding Spirent Communications plc or give up 15.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Ebro Foods
Performance |
| Timeline |
| Spirent Communications |
| Ebro Foods |
Spirent Communications and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Ebro Foods
The main advantage of trading using opposite Spirent Communications and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. Fonix Mobile plc | Spirent Communications vs. mobilezone holding AG | Spirent Communications vs. Auto Trader Group | Spirent Communications vs. JPMorgan Japanese Investment |
| Ebro Foods vs. Dairy Farm International | Ebro Foods vs. Moneta Money Bank | Ebro Foods vs. Erste Group Bank | Ebro Foods vs. Roebuck Food Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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