Correlation Between Commonwealth Bank and Erste Group
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank 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 Commonwealth Bank and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and Erste Group Bank, you can compare the effects of market volatilities on Commonwealth Bank 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 Commonwealth Bank with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Erste Group.
Diversification Opportunities for Commonwealth Bank and Erste Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commonwealth and Erste is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of 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 Commonwealth Bank 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 Commonwealth Bank of 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 Commonwealth Bank i.e., Commonwealth Bank and Erste Group go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Erste Group
Assuming the 90 days horizon Commonwealth Bank is expected to generate 1.56 times less return on investment than Erste Group. But when comparing it to its historical volatility, Commonwealth Bank of is 1.18 times less risky than Erste Group. It trades about 0.08 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,951 in Erste Group Bank on October 12, 2024 and sell it today you would earn a total of 3,047 from holding Erste Group Bank or generate 103.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Commonwealth Bank of vs. Erste Group Bank
Performance |
| Timeline |
| Commonwealth Bank |
| Erste Group Bank |
Commonwealth Bank and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Erste Group
The main advantage of trading using opposite Commonwealth Bank and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank 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.| Commonwealth Bank vs. PKSHA TECHNOLOGY INC | Commonwealth Bank vs. STORE ELECTRONIC | Commonwealth Bank vs. Methode Electronics | Commonwealth Bank vs. Amkor Technology |
| Erste Group vs. Scottish Mortgage Investment | Erste Group vs. Japan Asia Investment | Erste Group vs. Ultra Clean Holdings | Erste Group vs. FIRST SAVINGS FINL |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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