Correlation Between Erste Group and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Erste Group and Universal Insurance 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 Universal Insurance 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 Universal Insurance Holdings, you can compare the effects of market volatilities on Erste Group and Universal Insurance 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Universal Insurance.
Diversification Opportunities for Erste Group and Universal Insurance
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erste and Universal is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Erste Group i.e., Erste Group and Universal Insurance go up and down completely randomly.
Pair Corralation between Erste Group and Universal Insurance
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.66 times more return on investment than Universal Insurance. However, Erste Group Bank is 1.51 times less risky than Universal Insurance. It trades about 0.2 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about -0.24 per unit of risk. If you would invest 5,792 in Erste Group Bank on October 13, 2024 and sell it today you would earn a total of 232.00 from holding Erste Group Bank or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Erste Group Bank vs. Universal Insurance Holdings
Performance |
| Timeline |
| Erste Group Bank |
| Universal Insurance |
Erste Group and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Universal Insurance
The main advantage of trading using opposite Erste Group and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
| Universal Insurance vs. Synchrony Financial | Universal Insurance vs. Erste Group Bank | Universal Insurance vs. InterContinental Hotels Group | Universal Insurance vs. UNIQA INSURANCE GR |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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