Correlation Between Ebro Foods and Empire Metals
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Empire Metals 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 Ebro Foods and Empire Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Empire Metals Limited, you can compare the effects of market volatilities on Ebro Foods and Empire Metals 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 Ebro Foods with a short position of Empire Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Empire Metals.
Diversification Opportunities for Ebro Foods and Empire Metals
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Empire is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Empire Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Metals Limited and Ebro Foods 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 Ebro Foods are associated (or correlated) with Empire Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Metals Limited has no effect on the direction of Ebro Foods i.e., Ebro Foods and Empire Metals go up and down completely randomly.
Pair Corralation between Ebro Foods and Empire Metals
Assuming the 90 days trading horizon Ebro Foods is expected to under-perform the Empire Metals. But the stock apears to be less risky and, when comparing its historical volatility, Ebro Foods is 7.36 times less risky than Empire Metals. The stock trades about -0.06 of its potential returns per unit of risk. The Empire Metals Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 600.00 in Empire Metals Limited on September 25, 2024 and sell it today you would earn a total of 55.00 from holding Empire Metals Limited or generate 9.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Ebro Foods vs. Empire Metals Limited
Performance |
Timeline |
Ebro Foods |
Empire Metals Limited |
Ebro Foods and Empire Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ebro Foods and Empire Metals
The main advantage of trading using opposite Ebro Foods and Empire Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Empire Metals 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 Empire Metals will offset losses from the drop in Empire Metals' long position.Ebro Foods vs. Uniper SE | Ebro Foods vs. Mulberry Group PLC | Ebro Foods vs. London Security Plc | Ebro Foods vs. Triad Group PLC |
Empire Metals vs. Vitec Software Group | Empire Metals vs. Allianz Technology Trust | Empire Metals vs. National Beverage Corp | Empire Metals vs. Ebro Foods |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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