Correlation Between Erste Group and Phibro Animal
Can any of the company-specific risk be diversified away by investing in both Erste Group and Phibro Animal 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 Phibro Animal 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 Phibro Animal Health, you can compare the effects of market volatilities on Erste Group and Phibro Animal 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 Phibro Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Phibro Animal.
Diversification Opportunities for Erste Group and Phibro Animal
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and Phibro is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health 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 Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Erste Group i.e., Erste Group and Phibro Animal go up and down completely randomly.
Pair Corralation between Erste Group and Phibro Animal
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.53 times more return on investment than Phibro Animal. However, Erste Group Bank is 1.87 times less risky than Phibro Animal. It trades about 0.1 of its potential returns per unit of risk. Phibro Animal Health is currently generating about 0.04 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 3,090 from holding Erste Group Bank or generate 103.62% 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. Phibro Animal Health
Performance |
| Timeline |
| Erste Group Bank |
| Phibro Animal Health |
Erste Group and Phibro Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Phibro Animal
The main advantage of trading using opposite Erste Group and Phibro Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Phibro Animal 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 Phibro Animal will offset losses from the drop in Phibro Animal'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 |
| Phibro Animal vs. QUEEN S ROAD | Phibro Animal vs. Erste Group Bank | Phibro Animal vs. Gold Road Resources | Phibro Animal vs. Synchrony Financial |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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