Correlation Between Erste Group and Roebuck Food
Can any of the company-specific risk be diversified away by investing in both Erste Group and Roebuck Food 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 Roebuck Food 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 Roebuck Food Group, you can compare the effects of market volatilities on Erste Group and Roebuck Food 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 Roebuck Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Roebuck Food.
Diversification Opportunities for Erste Group and Roebuck Food
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erste and Roebuck is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Roebuck Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roebuck Food Group 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 Roebuck Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roebuck Food Group has no effect on the direction of Erste Group i.e., Erste Group and Roebuck Food go up and down completely randomly.
Pair Corralation between Erste Group and Roebuck Food
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.77 times more return on investment than Roebuck Food. However, Erste Group Bank is 1.29 times less risky than Roebuck Food. It trades about 0.12 of its potential returns per unit of risk. Roebuck Food Group is currently generating about 0.02 per unit of risk. If you would invest 2,990 in Erste Group Bank on August 31, 2024 and sell it today you would earn a total of 2,191 from holding Erste Group Bank or generate 73.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Erste Group Bank vs. Roebuck Food Group
Performance |
| Timeline |
| Erste Group Bank |
| Roebuck Food Group |
Erste Group and Roebuck Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Roebuck Food
The main advantage of trading using opposite Erste Group and Roebuck Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Roebuck Food 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 Roebuck Food will offset losses from the drop in Roebuck Food's long position.| Erste Group vs. TechnipFMC PLC | Erste Group vs. Microchip Technology | Erste Group vs. Cornish Metals | Erste Group vs. Roper Technologies |
| Roebuck Food vs. Wheaton Precious Metals | Roebuck Food vs. International Consolidated Airlines | Roebuck Food vs. Coeur Mining | Roebuck Food vs. CAP LEASE AVIATION |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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