Correlation Between Ecotel Communication and Nomad Foods

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

By analyzing existing cross correlation between ecotel communication ag and Nomad Foods, you can compare the effects of market volatilities on Ecotel Communication and Nomad 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 Ecotel Communication with a short position of Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecotel Communication and Nomad Foods.

Diversification Opportunities for Ecotel Communication and Nomad Foods

0.2

Correlation Coefficient

Ecotel Communication  Nomad Foods

Modest diversification

The 3 months correlation between Ecotel and Nomad is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ecotel communication ag and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods and Ecotel Communication 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 ecotel communication ag are associated (or correlated) with Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of Ecotel Communication i.e., Ecotel Communication and Nomad Foods go up and down completely randomly.

Pair Corralation between Ecotel Communication and Nomad Foods

Assuming the 90 days trading horizon ecotel communication ag is expected to under-perform the Nomad Foods. But the stock apears to be less risky and, when comparing its historical volatility, ecotel communication ag is 1.34 times less risky than Nomad Foods. The stock trades about -0.18 of its potential returns per unit of risk. The Nomad Foods is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,610  in Nomad Foods on October 11, 2024 and sell it today you would lose (50.00) from holding Nomad Foods or give up 3.11% of portfolio value over 90 days.

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

ecotel communication ag  vs.  Nomad Foods

ecotel communication

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ecotel communication ag are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ecotel Communication is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nomad Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomad Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nomad Foods is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ecotel Communication and Nomad Foods

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

The idea behind ecotel communication ag and Nomad 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.