Correlation Between Viscofan and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Viscofan 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 Viscofan and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viscofan and Ebro Foods, you can compare the effects of market volatilities on Viscofan 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 Viscofan with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viscofan and Ebro Foods.
Diversification Opportunities for Viscofan and Ebro Foods
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Viscofan and Ebro is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Viscofan and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Viscofan 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 Viscofan 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 Viscofan i.e., Viscofan and Ebro Foods go up and down completely randomly.
Pair Corralation between Viscofan and Ebro Foods
Assuming the 90 days trading horizon Viscofan is expected to generate 1.07 times more return on investment than Ebro Foods. However, Viscofan is 1.07 times more volatile than Ebro Foods. It trades about 0.11 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.04 per unit of risk. If you would invest 6,090 in Viscofan on November 2, 2024 and sell it today you would earn a total of 90.00 from holding Viscofan or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viscofan vs. Ebro Foods
Performance |
| Timeline |
| Viscofan |
| Ebro Foods |
Viscofan and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viscofan and Ebro Foods
The main advantage of trading using opposite Viscofan and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viscofan 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.The idea behind Viscofan and Ebro Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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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