Correlation Between OTP Bank and Schroders PLC
Can any of the company-specific risk be diversified away by investing in both OTP Bank and Schroders PLC 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 OTP Bank and Schroders PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OTP Bank Nyrt and Schroders PLC, you can compare the effects of market volatilities on OTP Bank and Schroders PLC 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 OTP Bank with a short position of Schroders PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and Schroders PLC.
Diversification Opportunities for OTP Bank and Schroders PLC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between OTP and Schroders is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Schroders PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schroders PLC and OTP Bank 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 OTP Bank Nyrt are associated (or correlated) with Schroders PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schroders PLC has no effect on the direction of OTP Bank i.e., OTP Bank and Schroders PLC go up and down completely randomly.
Pair Corralation between OTP Bank and Schroders PLC
Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 3.76 times more return on investment than Schroders PLC. However, OTP Bank is 3.76 times more volatile than Schroders PLC. It trades about 0.03 of its potential returns per unit of risk. Schroders PLC is currently generating about -0.04 per unit of risk. If you would invest 1,176,324 in OTP Bank Nyrt on September 3, 2024 and sell it today you would earn a total of 82,676 from holding OTP Bank Nyrt or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OTP Bank Nyrt vs. Schroders PLC
Performance |
| Timeline |
| OTP Bank Nyrt |
| Schroders PLC |
OTP Bank and Schroders PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and Schroders PLC
The main advantage of trading using opposite OTP Bank and Schroders PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, Schroders PLC 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 Schroders PLC will offset losses from the drop in Schroders PLC's long position.| OTP Bank vs. AMG Advanced Metallurgical | OTP Bank vs. Panther Metals PLC | OTP Bank vs. G5 Entertainment AB | OTP Bank vs. Everyman Media Group |
| Schroders PLC vs. FC Investment Trust | Schroders PLC vs. Neometals | Schroders PLC vs. Jacquet Metal Service | Schroders PLC vs. SilverCrest Metals |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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