Correlation Between STEEL DYNAMICS and EBRO FOODS
Can any of the company-specific risk be diversified away by investing in both STEEL DYNAMICS 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 STEEL DYNAMICS and EBRO FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STEEL DYNAMICS and EBRO FOODS, you can compare the effects of market volatilities on STEEL DYNAMICS 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 STEEL DYNAMICS with a short position of EBRO FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and EBRO FOODS.
Diversification Opportunities for STEEL DYNAMICS and EBRO FOODS
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STEEL and EBRO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS and STEEL DYNAMICS 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 STEEL DYNAMICS 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 has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and EBRO FOODS go up and down completely randomly.
Pair Corralation between STEEL DYNAMICS and EBRO FOODS
Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 2.5 times more return on investment than EBRO FOODS. However, STEEL DYNAMICS is 2.5 times more volatile than EBRO FOODS. It trades about 0.05 of its potential returns per unit of risk. EBRO FOODS is currently generating about 0.08 per unit of risk. If you would invest 11,055 in STEEL DYNAMICS on December 22, 2024 and sell it today you would earn a total of 521.00 from holding STEEL DYNAMICS or generate 4.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
STEEL DYNAMICS vs. EBRO FOODS
Performance |
Timeline |
STEEL DYNAMICS |
EBRO FOODS |
STEEL DYNAMICS and EBRO FOODS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with STEEL DYNAMICS and EBRO FOODS
The main advantage of trading using opposite STEEL DYNAMICS and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL DYNAMICS 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's long position.STEEL DYNAMICS vs. TAL Education Group | STEEL DYNAMICS vs. Adtalem Global Education | STEEL DYNAMICS vs. STRAYER EDUCATION | STEEL DYNAMICS vs. Tower One Wireless |
EBRO FOODS vs. Samsung Electronics Co | EBRO FOODS vs. Ping An Insurance | EBRO FOODS vs. Goosehead Insurance | EBRO FOODS vs. MSAD INSURANCE |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |