Correlation Between Banco Do and Eurobank Ergasias
Can any of the company-specific risk be diversified away by investing in both Banco Do and Eurobank Ergasias 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 Banco Do and Eurobank Ergasias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Brasil and Eurobank Ergasias Services, you can compare the effects of market volatilities on Banco Do and Eurobank Ergasias 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 Banco Do with a short position of Eurobank Ergasias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Eurobank Ergasias.
Diversification Opportunities for Banco Do and Eurobank Ergasias
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Banco and Eurobank is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Banco Do 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 Banco do Brasil are associated (or correlated) with Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Banco Do i.e., Banco Do and Eurobank Ergasias go up and down completely randomly.
Pair Corralation between Banco Do and Eurobank Ergasias
Assuming the 90 days trading horizon Banco do Brasil is expected to under-perform the Eurobank Ergasias. But the stock apears to be less risky and, when comparing its historical volatility, Banco do Brasil is 2.71 times less risky than Eurobank Ergasias. The stock trades about -0.03 of its potential returns per unit of risk. The Eurobank Ergasias Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 159.00 in Eurobank Ergasias Services on August 25, 2024 and sell it today you would earn a total of 50.00 from holding Eurobank Ergasias Services or generate 31.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 74.09% |
| Values | Daily Returns |
Banco do Brasil vs. Eurobank Ergasias Services
Performance |
| Timeline |
| Banco do Brasil |
| Eurobank Ergasias |
Banco Do and Eurobank Ergasias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and Eurobank Ergasias
The main advantage of trading using opposite Banco Do and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, Eurobank Ergasias 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 Eurobank Ergasias will offset losses from the drop in Eurobank Ergasias' long position.| Banco Do vs. Banco Bradesco SA | Banco Do vs. Petrleo Brasileiro SA | Banco Do vs. Ita Unibanco Holding | Banco Do vs. Itasa Investimentos |
| Eurobank Ergasias vs. SunOpta | Eurobank Ergasias vs. LB Foster | Eurobank Ergasias vs. Hertz Global Holdings | Eurobank Ergasias vs. Cardinal Health |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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