Correlation Between Fastly and Erste Group
Can any of the company-specific risk be diversified away by investing in both Fastly and Erste 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 Fastly and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastly Inc and Erste Group Bank, you can compare the effects of market volatilities on Fastly and Erste 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 Fastly with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastly and Erste Group.
Diversification Opportunities for Fastly and Erste Group
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fastly and Erste is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Fastly 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 Fastly Inc are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Fastly i.e., Fastly and Erste Group go up and down completely randomly.
Pair Corralation between Fastly and Erste Group
Given the investment horizon of 90 days Fastly Inc is expected to under-perform the Erste Group. In addition to that, Fastly is 2.54 times more volatile than Erste Group Bank. It trades about -0.18 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.17 per unit of volatility. If you would invest 2,874 in Erste Group Bank on October 9, 2024 and sell it today you would earn a total of 136.00 from holding Erste Group Bank or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fastly Inc vs. Erste Group Bank
Performance |
| Timeline |
| Fastly Inc |
| Erste Group Bank |
Fastly and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fastly and Erste Group
The main advantage of trading using opposite Fastly and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastly position performs unexpectedly, Erste 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 Erste Group will offset losses from the drop in Erste Group's long position.The idea behind Fastly Inc and Erste Group Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Erste Group vs. Eurobank Ergasias Services | Erste Group vs. Standard Bank Group | Erste Group vs. Bank Central Asia | Erste Group vs. PSB Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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