Correlation Between Erste Group and DEUTSCHE WOHNEN
Can any of the company-specific risk be diversified away by investing in both Erste Group and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN ADRS12, you can compare the effects of market volatilities on Erste Group and DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and DEUTSCHE WOHNEN.
Diversification Opportunities for Erste Group and DEUTSCHE WOHNEN
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and DEUTSCHE is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and DEUTSCHE WOHNEN ADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE WOHNEN ADRS12 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 DEUTSCHE WOHNEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE WOHNEN ADRS12 has no effect on the direction of Erste Group i.e., Erste Group and DEUTSCHE WOHNEN go up and down completely randomly.
Pair Corralation between Erste Group and DEUTSCHE WOHNEN
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.62 times more return on investment than DEUTSCHE WOHNEN. However, Erste Group Bank is 1.62 times less risky than DEUTSCHE WOHNEN. It trades about 0.1 of its potential returns per unit of risk. DEUTSCHE WOHNEN ADRS12 is currently generating about 0.01 per unit of risk. If you would invest 2,982 in Erste Group Bank on October 16, 2024 and sell it today you would earn a total of 3,036 from holding Erste Group Bank or generate 101.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.6% |
| Values | Daily Returns |
Erste Group Bank vs. DEUTSCHE WOHNEN ADRS12
Performance |
| Timeline |
| Erste Group Bank |
| DEUTSCHE WOHNEN ADRS12 |
Erste Group and DEUTSCHE WOHNEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and DEUTSCHE WOHNEN
The main advantage of trading using opposite Erste Group and DEUTSCHE WOHNEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN will offset losses from the drop in DEUTSCHE WOHNEN's long position.| Erste Group vs. Sch Environnement SA | Erste Group vs. Lifeway Foods | Erste Group vs. EBRO FOODS | Erste Group vs. INDOFOOD AGRI RES |
| DEUTSCHE WOHNEN vs. Molson Coors Beverage | DEUTSCHE WOHNEN vs. Tsingtao Brewery | DEUTSCHE WOHNEN vs. Fevertree Drinks PLC | DEUTSCHE WOHNEN vs. Adtalem Global Education |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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