Correlation Between Erste Group and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Erste Group and Entravision Communications 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 Entravision Communications 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 Entravision Communications, you can compare the effects of market volatilities on Erste Group and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Entravision Communications.
Diversification Opportunities for Erste Group and Entravision Communications
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erste and Entravision is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Erste Group i.e., Erste Group and Entravision Communications go up and down completely randomly.
Pair Corralation between Erste Group and Entravision Communications
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.18 times more return on investment than Entravision Communications. However, Erste Group Bank is 5.53 times less risky than Entravision Communications. It trades about 0.26 of its potential returns per unit of risk. Entravision Communications is currently generating about 0.0 per unit of risk. If you would invest 5,908 in Erste Group Bank on October 30, 2024 and sell it today you would earn a total of 322.00 from holding Erste Group Bank or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Entravision Communications
Performance |
| Timeline |
| Erste Group Bank |
| Entravision Communications |
Erste Group and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Entravision Communications
The main advantage of trading using opposite Erste Group and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
| Entravision Communications vs. SEALED AIR | Entravision Communications vs. Fevertree Drinks PLC | Entravision Communications vs. Monster Beverage Corp | Entravision Communications vs. Air New Zealand |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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