Correlation Between Erste Group and SpareBank

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Can any of the company-specific risk be diversified away by investing in both Erste Group and SpareBank 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 Erste Group and SpareBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and SpareBank 1 SMN, you can compare the effects of market volatilities on Erste Group and SpareBank 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 Erste Group with a short position of SpareBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and SpareBank.

Diversification Opportunities for Erste Group and SpareBank

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Erste and SpareBank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and SpareBank 1 SMN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpareBank 1 SMN and Erste Group 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 Erste Group Bank are associated (or correlated) with SpareBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpareBank 1 SMN has no effect on the direction of Erste Group i.e., Erste Group and SpareBank go up and down completely randomly.

Pair Corralation between Erste Group and SpareBank

If you would invest  2,656  in Erste Group Bank on September 12, 2024 and sell it today you would earn a total of  278.00  from holding Erste Group Bank or generate 10.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Erste Group Bank  vs.  SpareBank 1 SMN

 Performance 
       Timeline  
Erste Group Bank 

Risk-Adjusted Performance

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OK
Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Erste Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.
SpareBank 1 SMN 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days SpareBank 1 SMN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, SpareBank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Erste Group and SpareBank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Erste Group and SpareBank

The main advantage of trading using opposite Erste Group and SpareBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, SpareBank 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 SpareBank will offset losses from the drop in SpareBank's long position.
The idea behind Erste Group Bank and SpareBank 1 SMN pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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