Correlation Between Erste Group and Tatton Asset
Can any of the company-specific risk be diversified away by investing in both Erste Group and Tatton Asset 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 Tatton Asset 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 Tatton Asset Management, you can compare the effects of market volatilities on Erste Group and Tatton Asset 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 Tatton Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Tatton Asset.
Diversification Opportunities for Erste Group and Tatton Asset
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Erste and Tatton is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Erste Group i.e., Erste Group and Tatton Asset go up and down completely randomly.
Pair Corralation between Erste Group and Tatton Asset
Assuming the 90 days trading horizon Erste Group is expected to generate 1.13 times less return on investment than Tatton Asset. But when comparing it to its historical volatility, Erste Group Bank is 1.26 times less risky than Tatton Asset. It trades about 0.09 of its potential returns per unit of risk. Tatton Asset Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 59,276 in Tatton Asset Management on September 3, 2024 and sell it today you would earn a total of 10,124 from holding Tatton Asset Management or generate 17.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Tatton Asset Management
Performance |
| Timeline |
| Erste Group Bank |
| Tatton Asset Management |
Erste Group and Tatton Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Tatton Asset
The main advantage of trading using opposite Erste Group and Tatton Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Tatton Asset 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 Tatton Asset will offset losses from the drop in Tatton Asset's long position.| Erste Group vs. The Mercantile Investment | Erste Group vs. Schroders Investment Trusts | Erste Group vs. Hansa Investment | Erste Group vs. Taylor Maritime Investments |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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