Correlation Between Erste Group and Sparebanken Vest
Can any of the company-specific risk be diversified away by investing in both Erste Group and Sparebanken Vest 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 Erste Group and Sparebanken Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Sparebanken Vest, you can compare the effects of market volatilities on Erste Group and Sparebanken Vest 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 Erste Group with a short position of Sparebanken Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Sparebanken Vest.
Diversification Opportunities for Erste Group and Sparebanken Vest
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erste and Sparebanken is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Sparebanken Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Vest and Erste Group 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 Erste Group Bank are associated (or correlated) with Sparebanken Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Vest has no effect on the direction of Erste Group i.e., Erste Group and Sparebanken Vest go up and down completely randomly.
Pair Corralation between Erste Group and Sparebanken Vest
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.98 times more return on investment than Sparebanken Vest. However, Erste Group Bank is 1.02 times less risky than Sparebanken Vest. It trades about 0.09 of its potential returns per unit of risk. Sparebanken Vest is currently generating about 0.08 per unit of risk. If you would invest 3,197 in Erste Group Bank on November 7, 2024 and sell it today you would earn a total of 2,756 from holding Erste Group Bank or generate 86.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.58% |
| Values | Daily Returns |
Erste Group Bank vs. Sparebanken Vest
Performance |
| Timeline |
| Erste Group Bank |
| Sparebanken Vest |
Erste Group and Sparebanken Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Sparebanken Vest
The main advantage of trading using opposite Erste Group and Sparebanken Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Sparebanken Vest 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 Sparebanken Vest will offset losses from the drop in Sparebanken Vest's long position.| Erste Group vs. Geely Automobile Holdings | Erste Group vs. Supermarket Income REIT | Erste Group vs. Pressure Technologies Plc | Erste Group vs. TechnipFMC PLC |
| Sparebanken Vest vs. Samsung Electronics Co | Sparebanken Vest vs. Samsung Electronics Co | Sparebanken Vest vs. Toyota Motor Corp | Sparebanken Vest vs. Reliance Industries Ltd |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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