Correlation Between Piraeus Bank and Eastern Michigan

Can any of the company-specific risk be diversified away by investing in both Piraeus Bank and Eastern Michigan 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 Piraeus Bank and Eastern Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Piraeus Bank SA and Eastern Michigan Financial, you can compare the effects of market volatilities on Piraeus Bank and Eastern Michigan 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 Piraeus Bank with a short position of Eastern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piraeus Bank and Eastern Michigan.

Diversification Opportunities for Piraeus Bank and Eastern Michigan

-0.74

Correlation Coefficient

Piraeus Bank  Eastern Michigan

Pay attention - limited upside

The 3 months correlation between Piraeus and Eastern is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Bank SA and Eastern Michigan Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Michigan Fin and Piraeus 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 Piraeus Bank SA are associated (or correlated) with Eastern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Michigan Fin has no effect on the direction of Piraeus Bank i.e., Piraeus Bank and Eastern Michigan go up and down completely randomly.

Pair Corralation between Piraeus Bank and Eastern Michigan

Assuming the 90 days horizon Piraeus Bank SA is expected to under-perform the Eastern Michigan. In addition to that, Piraeus Bank is 1.95 times more volatile than Eastern Michigan Financial. It trades about -0.08 of its total potential returns per unit of risk. Eastern Michigan Financial is currently generating about 0.19 per unit of volatility. If you would invest  3,050  in Eastern Michigan Financial on August 31, 2024 and sell it today you would earn a total of  491.00  from holding Eastern Michigan Financial or generate 16.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Piraeus Bank SA  vs.  Eastern Michigan Financial

Piraeus Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piraeus Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Eastern Michigan Fin

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Michigan Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Eastern Michigan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Piraeus Bank and Eastern Michigan

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

The idea behind Piraeus Bank SA and Eastern Michigan Financial 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.