Correlation Between Erste Group and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Erste Group and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on Erste Group and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Fevertree Drinks.
Diversification Opportunities for Erste Group and Fevertree Drinks
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Erste and Fevertree is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of Erste Group i.e., Erste Group and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Erste Group and Fevertree Drinks
Assuming the 90 days trading horizon Erste Group is expected to generate 11.77 times less return on investment than Fevertree Drinks. But when comparing it to its historical volatility, Erste Group Bank is 4.09 times less risky than Fevertree Drinks. It trades about 0.07 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 775.00 in Fevertree Drinks PLC on November 7, 2024 and sell it today you would earn a total of 165.00 from holding Fevertree Drinks PLC or generate 21.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Fevertree Drinks PLC
Performance |
| Timeline |
| Erste Group Bank |
| Fevertree Drinks PLC |
Erste Group and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Fevertree Drinks
The main advantage of trading using opposite Erste Group and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Erste Group vs. Siamgas And Petrochemicals | Erste Group vs. Universal Health Realty | Erste Group vs. ALERION CLEANPOWER | Erste Group vs. ULTRA CLEAN HLDGS |
| Fevertree Drinks vs. Rayonier Advanced Materials | Fevertree Drinks vs. Mitsubishi Materials | Fevertree Drinks vs. Japan Tobacco | Fevertree Drinks vs. The Yokohama Rubber |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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