Correlation Between Piraeus Bank and Eurobank Ergasias

Can any of the company-specific risk be diversified away by investing in both Piraeus Bank and Eurobank Ergasias 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 Eurobank Ergasias 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 Eurobank Ergasias SA, you can compare the effects of market volatilities on Piraeus Bank and Eurobank Ergasias 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 Eurobank Ergasias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piraeus Bank and Eurobank Ergasias.

Diversification Opportunities for Piraeus Bank and Eurobank Ergasias

0.92

Correlation Coefficient

Piraeus Bank  Eurobank Ergasias

Almost no diversification

The 3 months correlation between Piraeus and Eurobank is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Bank SA and Eurobank Ergasias SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias 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 Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Piraeus Bank i.e., Piraeus Bank and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Piraeus Bank and Eurobank Ergasias

Assuming the 90 days horizon Piraeus Bank SA is expected to generate 0.88 times more return on investment than Eurobank Ergasias. However, Piraeus Bank SA is 1.13 times less risky than Eurobank Ergasias. It trades about 0.19 of its potential returns per unit of risk. Eurobank Ergasias SA is currently generating about 0.13 per unit of risk. If you would invest  415.00  in Piraeus Bank SA on December 27, 2024 and sell it today you would earn a total of  153.00  from holding Piraeus Bank SA or generate 36.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Piraeus Bank SA  vs.  Eurobank Ergasias SA

Piraeus Bank SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Bank SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Piraeus Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Eurobank Ergasias

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Eurobank Ergasias showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Piraeus Bank and Eurobank Ergasias

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

The idea behind Piraeus Bank SA and Eurobank Ergasias SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.