Correlation Between Erste Group and Coeur Mining

Can any of the company-specific risk be diversified away by investing in both Erste Group and Coeur Mining 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 Erste Group and Coeur Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Erste Group Bank and Coeur Mining, you can compare the effects of market volatilities on Erste Group and Coeur Mining 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 Erste Group with a short position of Coeur Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Coeur Mining.

Diversification Opportunities for Erste Group and Coeur Mining

-0.23

Correlation Coefficient

Erste Group  Coeur Mining

Very good diversification

The 3 months correlation between Erste and Coeur is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Coeur Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coeur Mining and Erste Group 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 Erste Group Bank are associated (or correlated) with Coeur Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coeur Mining has no effect on the direction of Erste Group i.e., Erste Group and Coeur Mining go up and down completely randomly.

Pair Corralation between Erste Group and Coeur Mining

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.55 times more return on investment than Coeur Mining. However, Erste Group Bank is 1.81 times less risky than Coeur Mining. It trades about 0.1 of its potential returns per unit of risk. Coeur Mining is currently generating about 0.06 per unit of risk. If you would invest  5,884  in Erste Group Bank on December 21, 2024 and sell it today you would earn a total of  786.00  from holding Erste Group Bank or generate 13.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Erste Group Bank  vs.  Coeur Mining

Erste Group Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Erste Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Coeur Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coeur Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Coeur Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erste Group and Coeur Mining

The main advantage of trading using opposite Erste Group and Coeur Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Coeur Mining 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 Coeur Mining will offset losses from the drop in Coeur Mining's long position.

The idea behind Erste Group Bank and Coeur Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.