Correlation Between Erste Group and EVS Broadcast
Can any of the company-specific risk be diversified away by investing in both Erste Group and EVS Broadcast 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 EVS Broadcast 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 EVS Broadcast Equipment, you can compare the effects of market volatilities on Erste Group and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and EVS Broadcast.
Diversification Opportunities for Erste Group and EVS Broadcast
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erste and EVS is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Erste Group i.e., Erste Group and EVS Broadcast go up and down completely randomly.
Pair Corralation between Erste Group and EVS Broadcast
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.92 times more return on investment than EVS Broadcast. However, Erste Group Bank is 1.08 times less risky than EVS Broadcast. It trades about 0.28 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.1 per unit of risk. If you would invest 4,933 in Erste Group Bank on October 14, 2024 and sell it today you would earn a total of 1,098 from holding Erste Group Bank or generate 22.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. EVS Broadcast Equipment
Performance |
| Timeline |
| Erste Group Bank |
| EVS Broadcast Equipment |
Erste Group and EVS Broadcast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and EVS Broadcast
The main advantage of trading using opposite Erste Group and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, EVS Broadcast 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 EVS Broadcast will offset losses from the drop in EVS Broadcast's long position.| Erste Group vs. Premier Foods PLC | Erste Group vs. British American Tobacco | Erste Group vs. Science in Sport | Erste Group vs. United Utilities Group |
| EVS Broadcast vs. Walmart | EVS Broadcast vs. BYD Co | EVS Broadcast vs. Volkswagen AG | EVS Broadcast vs. Volkswagen AG Non Vtg |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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