Correlation Between Erste Group and Waste Management
Can any of the company-specific risk be diversified away by investing in both Erste Group and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Erste Group and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Waste Management.
Diversification Opportunities for Erste Group and Waste Management
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Erste and Waste is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Erste Group i.e., Erste Group and Waste Management go up and down completely randomly.
Pair Corralation between Erste Group and Waste Management
Assuming the 90 days trading horizon Erste Group is expected to generate 1.15 times less return on investment than Waste Management. In addition to that, Erste Group is 1.13 times more volatile than Waste Management. It trades about 0.14 of its total potential returns per unit of risk. Waste Management is currently generating about 0.19 per unit of volatility. If you would invest 19,490 in Waste Management on October 31, 2024 and sell it today you would earn a total of 810.00 from holding Waste Management or generate 4.16% 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. Waste Management
Performance |
| Timeline |
| Erste Group Bank |
| Waste Management |
Erste Group and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Waste Management
The main advantage of trading using opposite Erste Group and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Erste Group vs. Semiconductor Manufacturing International | Erste Group vs. Telecom Argentina SA | Erste Group vs. Tower Semiconductor | Erste Group vs. Magnachip Semiconductor |
| Waste Management vs. REVO INSURANCE SPA | Waste Management vs. Vienna Insurance Group | Waste Management vs. Singapore Reinsurance | Waste Management vs. SBI Insurance Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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