Correlation Between Erste Group and National Retail
Can any of the company-specific risk be diversified away by investing in both Erste Group and National Retail 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 National Retail 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 National Retail Properties, you can compare the effects of market volatilities on Erste Group and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and National Retail.
Diversification Opportunities for Erste Group and National Retail
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Erste and National is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Erste Group i.e., Erste Group and National Retail go up and down completely randomly.
Pair Corralation between Erste Group and National Retail
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.88 times more return on investment than National Retail. However, Erste Group Bank is 1.14 times less risky than National Retail. It trades about 0.21 of its potential returns per unit of risk. National Retail Properties is currently generating about -0.03 per unit of risk. If you would invest 4,396 in Erste Group Bank on November 3, 2024 and sell it today you would earn a total of 1,564 from holding Erste Group Bank or generate 35.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. National Retail Properties
Performance |
| Timeline |
| Erste Group Bank |
| National Retail Prop |
Erste Group and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and National Retail
The main advantage of trading using opposite Erste Group and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
| National Retail vs. SIVERS SEMICONDUCTORS AB | National Retail vs. NorAm Drilling AS | National Retail vs. Volkswagen AG | National Retail vs. Darden Restaurants |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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