Correlation Between Eurobank Ergasias and Piraeus Financial
Can any of the company-specific risk be diversified away by investing in both Eurobank Ergasias and Piraeus Financial 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 Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eurobank Ergasias Services and Piraeus Financial Holdings, you can compare the effects of market volatilities on Eurobank Ergasias and Piraeus Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurobank Ergasias and Piraeus Financial.
Diversification Opportunities for Eurobank Ergasias and Piraeus Financial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eurobank and Piraeus is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eurobank Ergasias Services and Piraeus Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Financial 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 Services are associated (or correlated) with Piraeus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Financial has no effect on the direction of Eurobank Ergasias i.e., Eurobank Ergasias and Piraeus Financial go up and down completely randomly.
Pair Corralation between Eurobank Ergasias and Piraeus Financial
Assuming the 90 days trading horizon Eurobank Ergasias is expected to generate 1.22 times less return on investment than Piraeus Financial. But when comparing it to its historical volatility, Eurobank Ergasias Services is 1.2 times less risky than Piraeus Financial. It trades about 0.07 of its potential returns per unit of risk. Piraeus Financial Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Piraeus Financial Holdings on November 2, 2024 and sell it today you would earn a total of 231.00 from holding Piraeus Financial Holdings or generate 107.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eurobank Ergasias Services vs. Piraeus Financial Holdings
Performance |
| Timeline |
| Eurobank Ergasias |
| Piraeus Financial |
Eurobank Ergasias and Piraeus Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eurobank Ergasias and Piraeus Financial
The main advantage of trading using opposite Eurobank Ergasias and Piraeus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurobank Ergasias position performs unexpectedly, Piraeus Financial 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 Financial will offset losses from the drop in Piraeus Financial's long position.| Eurobank Ergasias vs. Alpha Services and | Eurobank Ergasias vs. Piraeus Financial Holdings | Eurobank Ergasias vs. National Bank of | Eurobank Ergasias vs. Greek Organization of |
| Piraeus Financial vs. Marfin Investment Group | Piraeus Financial vs. Foodlink AE | Piraeus Financial vs. Hellenic Telecommunications Organization | Piraeus Financial vs. Eurobank Ergasias Services |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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