Correlation Between Erste Group and TRANSILVANIA INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both Erste Group and TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS ALLIANCE, you can compare the effects of market volatilities on Erste Group and TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and TRANSILVANIA INVESTMENTS.
Diversification Opportunities for Erste Group and TRANSILVANIA INVESTMENTS
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erste and TRANSILVANIA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and TRANSILVANIA INVESTMENTS ALLIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSILVANIA INVESTMENTS has no effect on the direction of Erste Group i.e., Erste Group and TRANSILVANIA INVESTMENTS go up and down completely randomly.
Pair Corralation between Erste Group and TRANSILVANIA INVESTMENTS
Assuming the 90 days trading horizon Erste Group is expected to generate 3.05 times less return on investment than TRANSILVANIA INVESTMENTS. But when comparing it to its historical volatility, Erste Group Bank is 1.99 times less risky than TRANSILVANIA INVESTMENTS. It trades about 0.14 of its potential returns per unit of risk. TRANSILVANIA INVESTMENTS ALLIANCE is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 37.00 in TRANSILVANIA INVESTMENTS ALLIANCE on November 3, 2024 and sell it today you would earn a total of 3.00 from holding TRANSILVANIA INVESTMENTS ALLIANCE or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. TRANSILVANIA INVESTMENTS ALLIA
Performance |
| Timeline |
| Erste Group Bank |
| TRANSILVANIA INVESTMENTS |
Erste Group and TRANSILVANIA INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and TRANSILVANIA INVESTMENTS
The main advantage of trading using opposite Erste Group and TRANSILVANIA INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS will offset losses from the drop in TRANSILVANIA INVESTMENTS's long position.| Erste Group vs. Infinity Capital Investments | Erste Group vs. AROBS TRANSILVANIA SOFTWARE | Erste Group vs. Digi Communications NV | Erste Group vs. Compania Hoteliera InterContinental |
| TRANSILVANIA INVESTMENTS vs. TTS | TRANSILVANIA INVESTMENTS vs. Med Life SA | TRANSILVANIA INVESTMENTS vs. Remarul 16 Februarie | TRANSILVANIA INVESTMENTS vs. Turism Felix B |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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