Correlation Between Erste Group and Sixt Leasing

Can any of the company-specific risk be diversified away by investing in both Erste Group and Sixt Leasing 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 Sixt Leasing 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 Sixt Leasing SE, you can compare the effects of market volatilities on Erste Group and Sixt Leasing 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 Sixt Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Sixt Leasing.

Diversification Opportunities for Erste Group and Sixt Leasing

-0.06

Correlation Coefficient

Erste Group  Sixt Leasing

Good diversification

The 3 months correlation between Erste and Sixt is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE 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 Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of Erste Group i.e., Erste Group and Sixt Leasing go up and down completely randomly.

Pair Corralation between Erste Group and Sixt Leasing

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.93 times more return on investment than Sixt Leasing. However, Erste Group Bank is 1.08 times less risky than Sixt Leasing. It trades about 0.1 of its potential returns per unit of risk. Sixt Leasing SE is currently generating about 0.07 per unit of risk. If you would invest  5,948  in Erste Group Bank on December 22, 2024 and sell it today you would earn a total of  796.00  from holding Erste Group Bank or generate 13.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Erste Group Bank  vs.  Sixt Leasing SE

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 fragile basic indicators, Erste Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sixt Leasing SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt Leasing SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Sixt Leasing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Erste Group and Sixt Leasing

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

The idea behind Erste Group Bank and Sixt Leasing SE 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.