Correlation Between Erste Group and Austrian Traded
Can any of the company-specific risk be diversified away by investing in both Erste Group and Austrian Traded 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 Austrian Traded 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 Austrian Traded Index, you can compare the effects of market volatilities on Erste Group and Austrian Traded 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 Austrian Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Austrian Traded.
Diversification Opportunities for Erste Group and Austrian Traded
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erste and Austrian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Austrian Traded Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austrian Traded Index 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 Austrian Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austrian Traded Index has no effect on the direction of Erste Group i.e., Erste Group and Austrian Traded go up and down completely randomly.
Pair Corralation between Erste Group and Austrian Traded
Assuming the 90 days trading horizon Erste Group is expected to generate 1.8 times less return on investment than Austrian Traded. In addition to that, Erste Group is 1.74 times more volatile than Austrian Traded Index. It trades about 0.15 of its total potential returns per unit of risk. Austrian Traded Index is currently generating about 0.48 per unit of volatility. If you would invest 360,743 in Austrian Traded Index on October 22, 2024 and sell it today you would earn a total of 17,307 from holding Austrian Traded Index or generate 4.8% 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. Austrian Traded Index
Performance |
| Timeline |
Erste Group and Austrian Traded Volatility Contrast
Predicted Return Density |
| Returns |
Erste Group Bank
Pair trading matchups for Erste Group
Austrian Traded Index
Pair trading matchups for Austrian Traded
Pair Trading with Erste Group and Austrian Traded
The main advantage of trading using opposite Erste Group and Austrian Traded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Austrian Traded 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 Austrian Traded will offset losses from the drop in Austrian Traded's long position.| Erste Group vs. Raiffeisen Bank International | Erste Group vs. OMV Aktiengesellschaft | Erste Group vs. Voestalpine AG | Erste Group vs. Vienna Insurance Group |
| Austrian Traded vs. Vienna Insurance Group | Austrian Traded vs. Erste Group Bank | Austrian Traded vs. AMAG Austria Metall | Austrian Traded vs. Oberbank AG |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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