Correlation Between Vidrala SA and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Vidrala SA 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 Vidrala SA and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vidrala SA and Ebro Foods, you can compare the effects of market volatilities on Vidrala SA 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 Vidrala SA with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vidrala SA and Ebro Foods.
Diversification Opportunities for Vidrala SA and Ebro Foods
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vidrala and Ebro is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vidrala SA and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Vidrala SA 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 Vidrala 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 Vidrala SA i.e., Vidrala SA and Ebro Foods go up and down completely randomly.
Pair Corralation between Vidrala SA and Ebro Foods
Assuming the 90 days trading horizon Vidrala SA is expected to under-perform the Ebro Foods. In addition to that, Vidrala SA is 1.68 times more volatile than Ebro Foods. It trades about -0.16 of its total potential returns per unit of risk. Ebro Foods is currently generating about -0.03 per unit of volatility. If you would invest 1,614 in Ebro Foods on August 27, 2024 and sell it today you would lose (12.00) from holding Ebro Foods or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vidrala SA vs. Ebro Foods
Performance |
| Timeline |
| Vidrala SA |
| Ebro Foods |
Vidrala SA and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vidrala SA and Ebro Foods
The main advantage of trading using opposite Vidrala SA and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vidrala SA 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.| Vidrala SA vs. Viscofan | Vidrala SA vs. CIE Automotive SA | Vidrala SA vs. Cia de Distribucion | Vidrala SA vs. Miquel y Costas |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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