Correlation Between LEROY SEAFOOD and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both LEROY SEAFOOD 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 LEROY SEAFOOD and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEROY SEAFOOD GRUNSPADR and Ebro Foods SA, you can compare the effects of market volatilities on LEROY SEAFOOD 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 LEROY SEAFOOD with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEROY SEAFOOD and Ebro Foods.
Diversification Opportunities for LEROY SEAFOOD and Ebro Foods
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LEROY and Ebro is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LEROY SEAFOOD GRUNSPADR 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 LEROY SEAFOOD 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 LEROY SEAFOOD GRUNSPADR 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 LEROY SEAFOOD i.e., LEROY SEAFOOD and Ebro Foods go up and down completely randomly.
Pair Corralation between LEROY SEAFOOD and Ebro Foods
Assuming the 90 days trading horizon LEROY SEAFOOD is expected to generate 1.92 times less return on investment than Ebro Foods. In addition to that, LEROY SEAFOOD is 2.83 times more volatile than Ebro Foods SA. It trades about 0.01 of its total potential returns per unit of risk. Ebro Foods SA is currently generating about 0.03 per unit of volatility. If you would invest 1,372 in Ebro Foods SA on September 24, 2024 and sell it today you would earn a total of 202.00 from holding Ebro Foods SA or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEROY SEAFOOD GRUNSPADR vs. Ebro Foods SA
Performance |
| Timeline |
| LEROY SEAFOOD GRUNSPADR |
| Ebro Foods SA |
LEROY SEAFOOD and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEROY SEAFOOD and Ebro Foods
The main advantage of trading using opposite LEROY SEAFOOD and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEROY SEAFOOD 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.| LEROY SEAFOOD vs. Mowi ASA | LEROY SEAFOOD vs. Lery Seafood Group | LEROY SEAFOOD vs. Nisshin Seifun Group |
| Ebro Foods vs. Mowi ASA | Ebro Foods vs. LEROY SEAFOOD GRUNSPADR | Ebro Foods vs. Lery Seafood Group | Ebro Foods vs. Nisshin Seifun 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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