Correlation Between Strategic Education and Erste Group
Can any of the company-specific risk be diversified away by investing in both Strategic Education 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 Strategic Education and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Education and Erste Group Bank, you can compare the effects of market volatilities on Strategic Education 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 Strategic Education with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and Erste Group.
Diversification Opportunities for Strategic Education and Erste Group
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Strategic and Erste is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education 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 Strategic Education 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 Strategic Education 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 Strategic Education i.e., Strategic Education and Erste Group go up and down completely randomly.
Pair Corralation between Strategic Education and Erste Group
Assuming the 90 days horizon Strategic Education is expected to generate 1.25 times less return on investment than Erste Group. But when comparing it to its historical volatility, Strategic Education is 1.25 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 0.3 of returns per unit of risk over similar time horizon. If you would invest 5,908 in Erste Group Bank on October 29, 2024 and sell it today you would earn a total of 380.00 from holding Erste Group Bank or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Education vs. Erste Group Bank
Performance |
| Timeline |
| Strategic Education |
| Erste Group Bank |
Strategic Education and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Education and Erste Group
The main advantage of trading using opposite Strategic Education and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education 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.| Strategic Education vs. Tradegate AG Wertpapierhandelsbank | Strategic Education vs. TRADELINK ELECTRON | Strategic Education vs. Synovus Financial Corp | Strategic Education vs. Synchrony Financial |
| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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