Correlation Between Erste Group and BAWAG Group
Can any of the company-specific risk be diversified away by investing in both Erste Group and BAWAG Group 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 BAWAG Group 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 BAWAG Group AG, you can compare the effects of market volatilities on Erste Group and BAWAG Group 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 BAWAG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and BAWAG Group.
Diversification Opportunities for Erste Group and BAWAG Group
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Erste and BAWAG is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and BAWAG Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAWAG Group AG 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 BAWAG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAWAG Group AG has no effect on the direction of Erste Group i.e., Erste Group and BAWAG Group go up and down completely randomly.
Pair Corralation between Erste Group and BAWAG Group
Assuming the 90 days trading horizon Erste Group is expected to generate 1.46 times less return on investment than BAWAG Group. But when comparing it to its historical volatility, Erste Group Bank is 1.07 times less risky than BAWAG Group. It trades about 0.23 of its potential returns per unit of risk. BAWAG Group AG is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 7,475 in BAWAG Group AG on November 4, 2024 and sell it today you would earn a total of 1,280 from holding BAWAG Group AG or generate 17.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. BAWAG Group AG
Performance |
| Timeline |
| Erste Group Bank |
| BAWAG Group AG |
Erste Group and BAWAG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and BAWAG Group
The main advantage of trading using opposite Erste Group and BAWAG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, BAWAG Group 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 BAWAG Group will offset losses from the drop in BAWAG Group'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 |
| BAWAG Group vs. Erste Group Bank | BAWAG Group vs. Raiffeisen Bank International | BAWAG Group vs. UNIQA Insurance Group | BAWAG Group vs. OMV Aktiengesellschaft |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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