Correlation Between Erste Group and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Erste Group and SBM Offshore 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 SBM Offshore 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 SBM Offshore NV, you can compare the effects of market volatilities on Erste Group and SBM Offshore 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 SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and SBM Offshore.
Diversification Opportunities for Erste Group and SBM Offshore
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erste and SBM is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Erste Group i.e., Erste Group and SBM Offshore go up and down completely randomly.
Pair Corralation between Erste Group and SBM Offshore
Assuming the 90 days trading horizon Erste Group is expected to generate 1.15 times less return on investment than SBM Offshore. In addition to that, Erste Group is 1.24 times more volatile than SBM Offshore NV. It trades about 0.16 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.23 per unit of volatility. If you would invest 1,666 in SBM Offshore NV on August 24, 2024 and sell it today you would earn a total of 112.00 from holding SBM Offshore NV or generate 6.72% 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. SBM Offshore NV
Performance |
| Timeline |
| Erste Group Bank |
| SBM Offshore NV |
Erste Group and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and SBM Offshore
The main advantage of trading using opposite Erste Group and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore'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 |
| SBM Offshore vs. AMAG Austria Metall | SBM Offshore vs. Addiko Bank AG | SBM Offshore vs. Erste Group Bank | SBM Offshore vs. Universal Music 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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