Correlation Between Ebro Foods and Roebuck Food

Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Roebuck Food 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 Roebuck Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ebro Foods and Roebuck Food Group, you can compare the effects of market volatilities on Ebro Foods and Roebuck Food 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 Roebuck Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Roebuck Food.

Diversification Opportunities for Ebro Foods and Roebuck Food

-0.4

Correlation Coefficient

Ebro Foods  Roebuck Food

Very good diversification

The 3 months correlation between Ebro and Roebuck is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Roebuck Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roebuck Food Group 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 Roebuck Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roebuck Food Group has no effect on the direction of Ebro Foods i.e., Ebro Foods and Roebuck Food go up and down completely randomly.

Pair Corralation between Ebro Foods and Roebuck Food

Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.77 times more return on investment than Roebuck Food. However, Ebro Foods is 1.3 times less risky than Roebuck Food. It trades about 0.2 of its potential returns per unit of risk. Roebuck Food Group is currently generating about -0.01 per unit of risk. If you would invest  1,555  in Ebro Foods on December 30, 2024 and sell it today you would earn a total of  133.00  from holding Ebro Foods or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ebro Foods  vs.  Roebuck Food Group

Ebro Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ebro Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Roebuck Food Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roebuck Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Roebuck Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ebro Foods and Roebuck Food

The main advantage of trading using opposite Ebro Foods and Roebuck Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Roebuck Food 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 Roebuck Food will offset losses from the drop in Roebuck Food's long position.

The idea behind Ebro Foods and Roebuck Food Group 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.