Correlation Between Traditions Bank and Piraeus Bank
Can any of the company-specific risk be diversified away by investing in both Traditions Bank and Piraeus Bank 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 Traditions Bank and Piraeus Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Traditions Bank and Piraeus Bank SA, you can compare the effects of market volatilities on Traditions Bank and Piraeus Bank 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 Traditions Bank with a short position of Piraeus Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Traditions Bank and Piraeus Bank.
Diversification Opportunities for Traditions Bank and Piraeus Bank
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Traditions and Piraeus is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Traditions Bank and Piraeus Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Bank SA and Traditions Bank 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 Traditions Bank are associated (or correlated) with Piraeus Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Bank SA has no effect on the direction of Traditions Bank i.e., Traditions Bank and Piraeus Bank go up and down completely randomly.
Pair Corralation between Traditions Bank and Piraeus Bank
Given the investment horizon of 90 days Traditions Bank is expected to generate 1.86 times less return on investment than Piraeus Bank. But when comparing it to its historical volatility, Traditions Bank is 1.45 times less risky than Piraeus Bank. It trades about 0.05 of its potential returns per unit of risk. Piraeus Bank SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 133.00 in Piraeus Bank SA on September 3, 2024 and sell it today you would earn a total of 239.00 from holding Piraeus Bank SA or generate 179.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Traditions Bank vs. Piraeus Bank SA
Performance |
| Timeline |
| Traditions Bank |
| Piraeus Bank SA |
Traditions Bank and Piraeus Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Traditions Bank and Piraeus Bank
The main advantage of trading using opposite Traditions Bank and Piraeus Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Traditions Bank position performs unexpectedly, Piraeus Bank 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 Bank will offset losses from the drop in Piraeus Bank's long position.| Traditions Bank vs. First Hawaiian | Traditions Bank vs. Central Pacific Financial | Traditions Bank vs. Territorial Bancorp | Traditions Bank vs. Comerica |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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