Correlation Between Spotify Technology and Erste Group
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Erste Group Bank, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Erste Group.
Diversification Opportunities for Spotify Technology and Erste Group
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spotify and Erste is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA 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 Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and Erste Group go up and down completely randomly.
Pair Corralation between Spotify Technology and Erste Group
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 2.26 times more return on investment than Erste Group. However, Spotify Technology is 2.26 times more volatile than Erste Group Bank. It trades about 0.43 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.22 per unit of risk. If you would invest 43,020 in Spotify Technology SA on November 2, 2024 and sell it today you would earn a total of 9,950 from holding Spotify Technology SA or generate 23.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. Erste Group Bank
Performance |
| Timeline |
| Spotify Technology |
| Erste Group Bank |
Spotify Technology and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Erste Group
The main advantage of trading using opposite Spotify Technology and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. Monster Beverage Corp | Spotify Technology vs. Charter Communications Cl | Spotify Technology vs. National Beverage Corp | Spotify Technology vs. Spirent Communications plc |
| Erste Group vs. Chrysalis Investments | Erste Group vs. Ubisoft Entertainment | Erste Group vs. Odfjell Drilling | Erste Group vs. BlackRock Frontiers Investment |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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