Correlation Between Erste Group and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Erste Group and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Erste Group and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Litigation Capital.
Diversification Opportunities for Erste Group and Litigation Capital
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Erste and Litigation is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Erste Group i.e., Erste Group and Litigation Capital go up and down completely randomly.
Pair Corralation between Erste Group and Litigation Capital
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.61 times more return on investment than Litigation Capital. However, Erste Group Bank is 1.65 times less risky than Litigation Capital. It trades about 0.11 of its potential returns per unit of risk. Litigation Capital Management is currently generating about 0.04 per unit of risk. If you would invest 3,054 in Erste Group Bank on October 28, 2024 and sell it today you would earn a total of 3,230 from holding Erste Group Bank or generate 105.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Litigation Capital Management
Performance |
| Timeline |
| Erste Group Bank |
| Litigation Capital |
Erste Group and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Litigation Capital
The main advantage of trading using opposite Erste Group and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Erste Group vs. Axway Software SA | Erste Group vs. Catena Media PLC | Erste Group vs. Grand Vision Media | Erste Group vs. JB Hunt Transport |
| Litigation Capital vs. SupplyMe Capital PLC | Litigation Capital vs. Premier African Minerals | Litigation Capital vs. SANTANDER UK 8 | Litigation Capital vs. Tower Resources plc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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