Correlation Between Erste Group and Raiffeisen Bank
Can any of the company-specific risk be diversified away by investing in both Erste Group and Raiffeisen 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 Erste Group and Raiffeisen Bank 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 Raiffeisen Bank International, you can compare the effects of market volatilities on Erste Group and Raiffeisen 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 Erste Group with a short position of Raiffeisen Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Raiffeisen Bank.
Diversification Opportunities for Erste Group and Raiffeisen Bank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erste and Raiffeisen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Raiffeisen Bank International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raiffeisen Bank Inte 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 Raiffeisen Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raiffeisen Bank Inte has no effect on the direction of Erste Group i.e., Erste Group and Raiffeisen Bank go up and down completely randomly.
Pair Corralation between Erste Group and Raiffeisen Bank
Assuming the 90 days trading horizon Erste Group is expected to generate 5.28 times less return on investment than Raiffeisen Bank. But when comparing it to its historical volatility, Erste Group Bank is 1.78 times less risky than Raiffeisen Bank. It trades about 0.13 of its potential returns per unit of risk. Raiffeisen Bank International is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 48,370 in Raiffeisen Bank International on November 3, 2024 and sell it today you would earn a total of 7,090 from holding Raiffeisen Bank International or generate 14.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Raiffeisen Bank International
Performance |
| Timeline |
| Erste Group Bank |
| Raiffeisen Bank Inte |
Erste Group and Raiffeisen Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Raiffeisen Bank
The main advantage of trading using opposite Erste Group and Raiffeisen Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Raiffeisen 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 Raiffeisen Bank will offset losses from the drop in Raiffeisen Bank's long position.| Erste Group vs. Raiffeisen Bank International | Erste Group vs. JT ARCH INVESTMENTS | Erste Group vs. Komercni Banka AS | Erste Group vs. Moneta Money Bank |
| Raiffeisen Bank vs. JT ARCH INVESTMENTS | Raiffeisen Bank vs. Komercni Banka AS | Raiffeisen Bank vs. UNIQA Insurance Group | Raiffeisen Bank vs. Erste Group Bank |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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