Correlation Between Banco Santander and Erste Group
Can any of the company-specific risk be diversified away by investing in both Banco Santander 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 Banco Santander and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander SA and Erste Group Bank, you can compare the effects of market volatilities on Banco Santander 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 Banco Santander with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Erste Group.
Diversification Opportunities for Banco Santander and Erste Group
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Banco and Erste is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA 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 Banco Santander 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 Banco Santander SA 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 Banco Santander i.e., Banco Santander and Erste Group go up and down completely randomly.
Pair Corralation between Banco Santander and Erste Group
Assuming the 90 days trading horizon Banco Santander SA is expected to under-perform the Erste Group. In addition to that, Banco Santander is 1.14 times more volatile than Erste Group Bank. It trades about -0.04 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.13 per unit of volatility. If you would invest 4,923 in Erste Group Bank on August 29, 2024 and sell it today you would earn a total of 229.00 from holding Erste Group Bank or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander SA vs. Erste Group Bank
Performance |
| Timeline |
| Banco Santander SA |
| Erste Group Bank |
Banco Santander and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Erste Group
The main advantage of trading using opposite Banco Santander and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander 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.| Banco Santander vs. RATH Aktiengesellschaft | Banco Santander vs. AT S Austria | Banco Santander vs. BAWAG Group AG | Banco Santander vs. Semperit Aktiengesellschaft Holding |
| Erste Group vs. Raiffeisen Bank International | Erste Group vs. OMV Aktiengesellschaft | Erste Group vs. Voestalpine AG | Erste Group vs. Vienna Insurance Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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