Correlation Between FAST RETAIL and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL 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 FAST RETAIL and Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAST RETAIL ADR and Ebro Foods SA, you can compare the effects of market volatilities on FAST RETAIL 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 FAST RETAIL with a short position of Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Ebro Foods.
Diversification Opportunities for FAST RETAIL and Ebro Foods
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FAST and Ebro is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR 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 FAST RETAIL 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 FAST RETAIL ADR 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 FAST RETAIL i.e., FAST RETAIL and Ebro Foods go up and down completely randomly.
Pair Corralation between FAST RETAIL and Ebro Foods
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the Ebro Foods. In addition to that, FAST RETAIL is 1.64 times more volatile than Ebro Foods SA. It trades about -0.07 of its total potential returns per unit of risk. Ebro Foods SA is currently generating about 0.07 per unit of volatility. If you would invest 1,592 in Ebro Foods SA on December 5, 2024 and sell it today you would earn a total of 46.00 from holding Ebro Foods SA or generate 2.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
FAST RETAIL ADR vs. Ebro Foods SA
Performance |
Timeline |
FAST RETAIL ADR |
Ebro Foods SA |
FAST RETAIL and Ebro Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FAST RETAIL and Ebro Foods
The main advantage of trading using opposite FAST RETAIL and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL 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.FAST RETAIL vs. AIR PRODCHEMICALS | FAST RETAIL vs. Daido Steel Co | FAST RETAIL vs. United States Steel | FAST RETAIL vs. NAKED WINES PLC |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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