Correlation Between Bank Fr and Erste Group

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

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

Diversification Opportunities for Bank Fr and Erste Group

0.0

Correlation Coefficient

Bank Fr  Erste Group

Pay attention - limited upside

The 3 months correlation between Bank and Erste is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Fr Tirol 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 Bank Fr 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 Bank Fr Tirol 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 Bank Fr i.e., Bank Fr and Erste Group go up and down completely randomly.

Pair Corralation between Bank Fr and Erste Group

If you would invest  5,882  in Erste Group Bank on December 25, 2024 and sell it today you would earn a total of  972.00  from holding Erste Group Bank or generate 16.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Bank Fr Tirol  vs.  Erste Group Bank

Bank Fr Tirol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Fr Tirol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bank Fr is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Erste Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Fr and Erste Group

The main advantage of trading using opposite Bank Fr and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Fr 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.

The idea behind Bank Fr Tirol and Erste Group Bank 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.