Correlation Between DB Physical and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both DB Physical 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 DB Physical and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DB Physical Gold and Ebro Foods, you can compare the effects of market volatilities on DB Physical 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 DB Physical with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Physical and Ebro Foods.
Diversification Opportunities for DB Physical and Ebro Foods
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XGLS and Ebro is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding DB Physical Gold and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and DB Physical 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 DB Physical Gold 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 DB Physical i.e., DB Physical and Ebro Foods go up and down completely randomly.
Pair Corralation between DB Physical and Ebro Foods
Assuming the 90 days trading horizon DB Physical Gold is expected to generate 1.78 times more return on investment than Ebro Foods. However, DB Physical is 1.78 times more volatile than Ebro Foods. It trades about 0.18 of its potential returns per unit of risk. Ebro Foods is currently generating about -0.19 per unit of risk. If you would invest 134,750 in DB Physical Gold on September 12, 2024 and sell it today you would earn a total of 5,100 from holding DB Physical Gold or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Physical Gold vs. Ebro Foods
Performance |
| Timeline |
| DB Physical Gold |
| Ebro Foods |
DB Physical and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Physical and Ebro Foods
The main advantage of trading using opposite DB Physical and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Physical 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.| DB Physical vs. iShares Physical Silver | DB Physical vs. Invesco Physical Silver | DB Physical vs. Neometals | DB Physical vs. Coor Service Management |
| Ebro Foods vs. Gaztransport et Technigaz | Ebro Foods vs. Leroy Seafood Group | Ebro Foods vs. Vienna Insurance Group | Ebro Foods vs. Sabre Insurance 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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