Correlation Between Microchip Technology and Erste Group
Can any of the company-specific risk be diversified away by investing in both Microchip Technology and Erste Group 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 Microchip Technology and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microchip Technology and Erste Group Bank, you can compare the effects of market volatilities on Microchip Technology and Erste Group 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 Microchip Technology with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microchip Technology and Erste Group.
Diversification Opportunities for Microchip Technology and Erste Group
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microchip and Erste is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Microchip Technology 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 Microchip Technology are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Microchip Technology i.e., Microchip Technology and Erste Group go up and down completely randomly.
Pair Corralation between Microchip Technology and Erste Group
Assuming the 90 days trading horizon Microchip Technology is expected to generate 13.21 times less return on investment than Erste Group. In addition to that, Microchip Technology is 1.55 times more volatile than Erste Group Bank. It trades about 0.01 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.1 per unit of volatility. If you would invest 2,515 in Erste Group Bank on August 31, 2024 and sell it today you would earn a total of 2,613 from holding Erste Group Bank or generate 103.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Microchip Technology vs. Erste Group Bank
Performance |
| Timeline |
| Microchip Technology |
| Erste Group Bank |
Microchip Technology and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microchip Technology and Erste Group
The main advantage of trading using opposite Microchip Technology and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microchip Technology position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Microchip Technology vs. Liontrust Asset Management | Microchip Technology vs. Home Depot | Microchip Technology vs. Tatton Asset Management | Microchip Technology vs. Spirent Communications plc |
| Erste Group vs. TechnipFMC PLC | Erste Group vs. Microchip Technology | Erste Group vs. Cornish Metals | Erste Group vs. Roper Technologies |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |