Correlation Between Erste Group and Lowland Investment
Can any of the company-specific risk be diversified away by investing in both Erste Group and Lowland Investment 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 Lowland Investment 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 Lowland Investment Co, you can compare the effects of market volatilities on Erste Group and Lowland Investment 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 Lowland Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Lowland Investment.
Diversification Opportunities for Erste Group and Lowland Investment
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erste and Lowland is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Lowland Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowland Investment 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 Lowland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowland Investment has no effect on the direction of Erste Group i.e., Erste Group and Lowland Investment go up and down completely randomly.
Pair Corralation between Erste Group and Lowland Investment
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 2.62 times more return on investment than Lowland Investment. However, Erste Group is 2.62 times more volatile than Lowland Investment Co. It trades about 0.13 of its potential returns per unit of risk. Lowland Investment Co is currently generating about 0.19 per unit of risk. If you would invest 5,775 in Erste Group Bank on December 3, 2024 and sell it today you would earn a total of 631.00 from holding Erste Group Bank or generate 10.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Erste Group Bank vs. Lowland Investment Co
Performance |
Timeline |
Erste Group Bank |
Lowland Investment |
Erste Group and Lowland Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Erste Group and Lowland Investment
The main advantage of trading using opposite Erste Group and Lowland Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Lowland Investment 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 Lowland Investment will offset losses from the drop in Lowland Investment's long position.Erste Group vs. Induction Healthcare Group | Erste Group vs. Hochschild Mining plc | Erste Group vs. Naturhouse Health SA | Erste Group vs. Metals Exploration Plc |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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