Correlation Between DEUTSCHE WOHNEN and Erste Group
Can any of the company-specific risk be diversified away by investing in both DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DEUTSCHE WOHNEN ADRS12 and Erste Group Bank, you can compare the effects of market volatilities on DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEUTSCHE WOHNEN and Erste Group.
Diversification Opportunities for DEUTSCHE WOHNEN and Erste Group
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DEUTSCHE and Erste is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE WOHNEN ADRS12 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 DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN ADRS12 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 DEUTSCHE WOHNEN i.e., DEUTSCHE WOHNEN and Erste Group go up and down completely randomly.
Pair Corralation between DEUTSCHE WOHNEN and Erste Group
Assuming the 90 days trading horizon DEUTSCHE WOHNEN ADRS12 is expected to under-perform the Erste Group. In addition to that, DEUTSCHE WOHNEN is 1.74 times more volatile than Erste Group Bank. It trades about -0.54 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.11 per unit of volatility. If you would invest 5,914 in Erste Group Bank on October 16, 2024 and sell it today you would earn a total of 104.00 from holding Erste Group Bank or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DEUTSCHE WOHNEN ADRS12 vs. Erste Group Bank
Performance |
| Timeline |
| DEUTSCHE WOHNEN ADRS12 |
| Erste Group Bank |
DEUTSCHE WOHNEN and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DEUTSCHE WOHNEN and Erste Group
The main advantage of trading using opposite DEUTSCHE WOHNEN and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DEUTSCHE WOHNEN 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.| DEUTSCHE WOHNEN vs. Erste Group Bank | DEUTSCHE WOHNEN vs. CAIRN HOMES EO | DEUTSCHE WOHNEN vs. United Insurance Holdings | DEUTSCHE WOHNEN vs. KENEDIX OFFICE INV |
| Erste Group vs. Applied Materials | Erste Group vs. United Rentals | Erste Group vs. PT Wintermar Offshore | Erste Group vs. SOLSTAD OFFSHORE NK |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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