Correlation Between Erste Group and Ecclesiastical Insurance
Can any of the company-specific risk be diversified away by investing in both Erste Group and Ecclesiastical Insurance 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 Ecclesiastical Insurance 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 Ecclesiastical Insurance Office, you can compare the effects of market volatilities on Erste Group and Ecclesiastical Insurance 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 Ecclesiastical Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Ecclesiastical Insurance.
Diversification Opportunities for Erste Group and Ecclesiastical Insurance
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and Ecclesiastical is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance 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 Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of Erste Group i.e., Erste Group and Ecclesiastical Insurance go up and down completely randomly.
Pair Corralation between Erste Group and Ecclesiastical Insurance
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.93 times more return on investment than Ecclesiastical Insurance. However, Erste Group Bank is 1.08 times less risky than Ecclesiastical Insurance. It trades about 0.41 of its potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about -0.01 per unit of risk. If you would invest 5,188 in Erste Group Bank on September 14, 2024 and sell it today you would earn a total of 559.00 from holding Erste Group Bank or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Ecclesiastical Insurance Offic
Performance |
| Timeline |
| Erste Group Bank |
| Ecclesiastical Insurance |
Erste Group and Ecclesiastical Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Ecclesiastical Insurance
The main advantage of trading using opposite Erste Group and Ecclesiastical Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Ecclesiastical Insurance 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 Ecclesiastical Insurance will offset losses from the drop in Ecclesiastical Insurance's long position.| Erste Group vs. Gaztransport et Technigaz | Erste Group vs. Primary Health Properties | Erste Group vs. Broadcom | Erste Group vs. Worldwide Healthcare Trust |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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