Correlation Between Austrian Traded and Erste Group
Can any of the company-specific risk be diversified away by investing in both Austrian Traded 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 Austrian Traded and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austrian Traded Index and Erste Group Bank, you can compare the effects of market volatilities on Austrian Traded 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 Austrian Traded with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austrian Traded and Erste Group.
Diversification Opportunities for Austrian Traded and Erste Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Austrian and Erste is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Austrian Traded Index 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 Austrian Traded 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 Austrian Traded Index 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 Austrian Traded i.e., Austrian Traded and Erste Group go up and down completely randomly.
Pair Corralation between Austrian Traded and Erste Group
Assuming the 90 days trading horizon Austrian Traded Index is expected to generate 0.58 times more return on investment than Erste Group. However, Austrian Traded Index is 1.74 times less risky than Erste Group. It trades about 0.48 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.15 per unit of risk. If you would invest 360,743 in Austrian Traded Index on October 22, 2024 and sell it today you would earn a total of 17,307 from holding Austrian Traded Index or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austrian Traded Index vs. Erste Group Bank
Performance |
| Timeline |
Austrian Traded and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Austrian Traded Index
Pair trading matchups for Austrian Traded
Erste Group Bank
Pair trading matchups for Erste Group
Pair Trading with Austrian Traded and Erste Group
The main advantage of trading using opposite Austrian Traded and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austrian Traded 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.| Austrian Traded vs. Vienna Insurance Group | Austrian Traded vs. Erste Group Bank | Austrian Traded vs. AMAG Austria Metall | Austrian Traded vs. Oberbank AG |
| Erste Group vs. Raiffeisen Bank International | Erste Group vs. OMV Aktiengesellschaft | Erste Group vs. Voestalpine AG | Erste Group vs. Vienna Insurance Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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