Correlation Between Apple and Erste Group
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Erste Group Bank, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Erste Group.
Diversification Opportunities for Apple and Erste Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apple and Erste is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Erste Group go up and down completely randomly.
Pair Corralation between Apple and Erste Group
Assuming the 90 days trading horizon Apple is expected to generate 25.06 times less return on investment than Erste Group. But when comparing it to its historical volatility, Apple Inc is 1.6 times less risky than Erste Group. It trades about 0.02 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 5,614 in Erste Group Bank on October 12, 2024 and sell it today you would earn a total of 384.00 from holding Erste Group Bank or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Erste Group Bank
Performance |
| Timeline |
| Apple Inc |
| Erste Group Bank |
Apple and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Erste Group
The main advantage of trading using opposite Apple and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Vulcan Materials | Apple vs. VULCAN MATERIALS | Apple vs. Plastic Omnium | Apple vs. Eagle Materials |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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