Correlation Between Vienna Insurance and Erste Group
Can any of the company-specific risk be diversified away by investing in both Vienna Insurance 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 Vienna Insurance and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vienna Insurance Group and Erste Group Bank, you can compare the effects of market volatilities on Vienna Insurance 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 Vienna Insurance with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and Erste Group.
Diversification Opportunities for Vienna Insurance and Erste Group
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vienna and Erste is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group 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 Vienna Insurance 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 Vienna Insurance Group 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 Vienna Insurance i.e., Vienna Insurance and Erste Group go up and down completely randomly.
Pair Corralation between Vienna Insurance and Erste Group
Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 0.74 times more return on investment than Erste Group. However, Vienna Insurance Group is 1.34 times less risky than Erste Group. It trades about 0.36 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.08 per unit of risk. If you would invest 3,025 in Vienna Insurance Group on November 3, 2024 and sell it today you would earn a total of 210.00 from holding Vienna Insurance Group or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vienna Insurance Group vs. Erste Group Bank
Performance |
| Timeline |
| Vienna Insurance |
| Erste Group Bank |
Vienna Insurance and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vienna Insurance and Erste Group
The main advantage of trading using opposite Vienna Insurance and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vienna Insurance 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.| Vienna Insurance vs. Erste Group Bank | Vienna Insurance vs. UNIQA Insurance Group | Vienna Insurance vs. Raiffeisen Bank International | Vienna Insurance vs. Voestalpine AG |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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