Correlation Between Erste Group and Walmart
Can any of the company-specific risk be diversified away by investing in both Erste Group and Walmart 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 Walmart 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 Walmart, you can compare the effects of market volatilities on Erste Group and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Walmart.
Diversification Opportunities for Erste Group and Walmart
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erste and Walmart is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Erste Group i.e., Erste Group and Walmart go up and down completely randomly.
Pair Corralation between Erste Group and Walmart
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 14.16 times more return on investment than Walmart. However, Erste Group is 14.16 times more volatile than Walmart. It trades about 0.58 of its potential returns per unit of risk. Walmart is currently generating about 0.22 per unit of risk. If you would invest 5,146 in Erste Group Bank on September 24, 2024 and sell it today you would earn a total of 729.00 from holding Erste Group Bank or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Walmart
Performance |
| Timeline |
| Erste Group Bank |
| Walmart |
Erste Group and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Walmart
The main advantage of trading using opposite Erste Group and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Erste Group vs. GoldMining | Erste Group vs. Silver Bullet Data | Erste Group vs. Hochschild Mining plc | Erste Group vs. Beowulf Mining |
| Walmart vs. GlobalData PLC | Walmart vs. Science in Sport | Walmart vs. Automatic Data Processing | Walmart vs. Erste Group Bank |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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