Correlation Between Volkswagen and Erste Group
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Erste Group 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 Volkswagen and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Erste Group Bank, you can compare the effects of market volatilities on Volkswagen and Erste Group 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 Volkswagen with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Erste Group.
Diversification Opportunities for Volkswagen and Erste Group
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volkswagen and Erste is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Volkswagen 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 Volkswagen AG are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Volkswagen i.e., Volkswagen and Erste Group go up and down completely randomly.
Pair Corralation between Volkswagen and Erste Group
Assuming the 90 days trading horizon Volkswagen is expected to generate 1.39 times less return on investment than Erste Group. In addition to that, Volkswagen is 1.26 times more volatile than Erste Group Bank. It trades about 0.17 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.29 per unit of volatility. If you would invest 5,463 in Erste Group Bank on October 10, 2024 and sell it today you would earn a total of 371.00 from holding Erste Group Bank or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Erste Group Bank
Performance |
| Timeline |
| Volkswagen AG |
| Erste Group Bank |
Volkswagen and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Erste Group
The main advantage of trading using opposite Volkswagen and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Volkswagen vs. Diversified Energy | Volkswagen vs. Monster Beverage Corp | Volkswagen vs. Jupiter Green Investment | Volkswagen vs. Tyson Foods Cl |
| Erste Group vs. Zurich Insurance Group | Erste Group vs. Bankers Investment Trust | Erste Group vs. Tetragon Financial Group | Erste Group vs. Silver Bullet Data |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |