Correlation Between Commerzbank and OTP Bank
Can any of the company-specific risk be diversified away by investing in both Commerzbank and OTP Bank 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 Commerzbank and OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and OTP Bank Nyrt, you can compare the effects of market volatilities on Commerzbank and OTP Bank 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 Commerzbank with a short position of OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and OTP Bank.
Diversification Opportunities for Commerzbank and OTP Bank
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commerzbank and OTP is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and OTP Bank Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OTP Bank Nyrt and Commerzbank 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 Commerzbank AG are associated (or correlated) with OTP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OTP Bank Nyrt has no effect on the direction of Commerzbank i.e., Commerzbank and OTP Bank go up and down completely randomly.
Pair Corralation between Commerzbank and OTP Bank
Assuming the 90 days trading horizon Commerzbank AG is expected to generate 2.49 times more return on investment than OTP Bank. However, Commerzbank is 2.49 times more volatile than OTP Bank Nyrt. It trades about 0.14 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.11 per unit of risk. If you would invest 396,471 in Commerzbank AG on August 29, 2024 and sell it today you would earn a total of 206,529 from holding Commerzbank AG or generate 52.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 50.24% |
| Values | Daily Returns |
Commerzbank AG vs. OTP Bank Nyrt
Performance |
| Timeline |
| Commerzbank AG |
| OTP Bank Nyrt |
Commerzbank and OTP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and OTP Bank
The main advantage of trading using opposite Commerzbank and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, OTP Bank 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 OTP Bank will offset losses from the drop in OTP Bank's long position.| Commerzbank vs. NordTelekom Telecommunications Service | Commerzbank vs. Nutex Investments PLC | Commerzbank vs. Delta Technologies Nyrt |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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