Correlation Between Erste Group and Trainline Plc
Can any of the company-specific risk be diversified away by investing in both Erste Group and Trainline Plc 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 Trainline Plc 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 Trainline Plc, you can compare the effects of market volatilities on Erste Group and Trainline Plc 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 Trainline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Trainline Plc.
Diversification Opportunities for Erste Group and Trainline Plc
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and Trainline is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline Plc 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of Erste Group i.e., Erste Group and Trainline Plc go up and down completely randomly.
Pair Corralation between Erste Group and Trainline Plc
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.36 times more return on investment than Trainline Plc. However, Erste Group Bank is 2.75 times less risky than Trainline Plc. It trades about 0.08 of its potential returns per unit of risk. Trainline Plc is currently generating about -0.19 per unit of risk. If you would invest 5,840 in Erste Group Bank on November 7, 2024 and sell it today you would earn a total of 113.00 from holding Erste Group Bank or generate 1.93% 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. Trainline Plc
Performance |
| Timeline |
| Erste Group Bank |
| Trainline Plc |
Erste Group and Trainline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Trainline Plc
The main advantage of trading using opposite Erste Group and Trainline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Trainline Plc 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 Trainline Plc will offset losses from the drop in Trainline Plc's long position.| Erste Group vs. JD Sports Fashion | Erste Group vs. Edinburgh Investment Trust | Erste Group vs. Tatton Asset Management | Erste Group vs. Vietnam Enterprise 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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