Correlation Between Rithm Capital and Erste Group
Can any of the company-specific risk be diversified away by investing in both Rithm Capital 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 Rithm Capital and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rithm Capital Corp and Erste Group Bank, you can compare the effects of market volatilities on Rithm Capital 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 Rithm Capital with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and Erste Group.
Diversification Opportunities for Rithm Capital and Erste Group
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rithm and Erste is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp 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 Rithm Capital 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 Rithm Capital Corp 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 Rithm Capital i.e., Rithm Capital and Erste Group go up and down completely randomly.
Pair Corralation between Rithm Capital and Erste Group
Assuming the 90 days trading horizon Rithm Capital is expected to generate 2.99 times less return on investment than Erste Group. But when comparing it to its historical volatility, Rithm Capital Corp is 4.79 times less risky than Erste Group. It trades about 0.3 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,072 in Erste Group Bank on October 24, 2024 and sell it today you would earn a total of 150.00 from holding Erste Group Bank or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rithm Capital Corp vs. Erste Group Bank
Performance |
| Timeline |
| Rithm Capital Corp |
| Erste Group Bank |
Rithm Capital and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rithm Capital and Erste Group
The main advantage of trading using opposite Rithm Capital and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital 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.| Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. PennyMac Mortgage Investment |
| Erste Group vs. DBS Group Holdings | Erste Group vs. Swedbank AB | Erste Group vs. United Overseas Bank | Erste Group vs. Bank Mandiri Persero |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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