Correlation Between Eurobank Ergasias and Piraeus Bank
Can any of the company-specific risk be diversified away by investing in both Eurobank Ergasias and Piraeus Bank 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 Eurobank Ergasias and Piraeus Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eurobank Ergasias SA and Piraeus Bank SA, you can compare the effects of market volatilities on Eurobank Ergasias and Piraeus Bank 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 Eurobank Ergasias with a short position of Piraeus Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurobank Ergasias and Piraeus Bank.
Diversification Opportunities for Eurobank Ergasias and Piraeus Bank
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eurobank and Piraeus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eurobank Ergasias SA and Piraeus Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Bank SA and Eurobank Ergasias 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 Eurobank Ergasias SA are associated (or correlated) with Piraeus Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Bank SA has no effect on the direction of Eurobank Ergasias i.e., Eurobank Ergasias and Piraeus Bank go up and down completely randomly.
Pair Corralation between Eurobank Ergasias and Piraeus Bank
Assuming the 90 days horizon Eurobank Ergasias SA is expected to generate 0.53 times more return on investment than Piraeus Bank. However, Eurobank Ergasias SA is 1.9 times less risky than Piraeus Bank. It trades about 0.05 of its potential returns per unit of risk. Piraeus Bank SA is currently generating about 0.02 per unit of risk. If you would invest 81.00 in Eurobank Ergasias SA on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Eurobank Ergasias SA or generate 32.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eurobank Ergasias SA vs. Piraeus Bank SA
Performance |
| Timeline |
| Eurobank Ergasias |
| Piraeus Bank SA |
Eurobank Ergasias and Piraeus Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eurobank Ergasias and Piraeus Bank
The main advantage of trading using opposite Eurobank Ergasias and Piraeus Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurobank Ergasias position performs unexpectedly, Piraeus Bank 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 Piraeus Bank will offset losses from the drop in Piraeus Bank's long position.| Eurobank Ergasias vs. Standard Bank Group | Eurobank Ergasias vs. PSB Holdings | Eurobank Ergasias vs. United Overseas Bank | Eurobank Ergasias vs. Turkiye Garanti Bankasi |
| Piraeus Bank vs. Standard Bank Group | Piraeus Bank vs. PSB Holdings | Piraeus Bank vs. United Overseas Bank | Piraeus Bank vs. Turkiye Garanti Bankasi |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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