Correlation Between Erste Group and OMV Aktiengesellscha

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

Diversification Opportunities for Erste Group and OMV Aktiengesellscha

0.73

Correlation Coefficient

Erste Group  OMV Aktiengesellscha

Poor diversification

The 3 months correlation between Erste and OMV is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and OMV Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMV Aktiengesellschaft 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 OMV Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMV Aktiengesellschaft has no effect on the direction of Erste Group i.e., Erste Group and OMV Aktiengesellscha go up and down completely randomly.

Pair Corralation between Erste Group and OMV Aktiengesellscha

Assuming the 90 days trading horizon Erste Group is expected to generate 2.26 times less return on investment than OMV Aktiengesellscha. In addition to that, Erste Group is 2.05 times more volatile than OMV Aktiengesellschaft. It trades about 0.07 of its total potential returns per unit of risk. OMV Aktiengesellschaft is currently generating about 0.33 per unit of volatility. If you would invest  3,734  in OMV Aktiengesellschaft on December 29, 2024 and sell it today you would earn a total of  1,028  from holding OMV Aktiengesellschaft or generate 27.53% 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.  OMV Aktiengesellschaft

Erste Group Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Erste Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

OMV Aktiengesellschaft

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in OMV Aktiengesellschaft are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, OMV Aktiengesellscha demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erste Group and OMV Aktiengesellscha

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

The idea behind Erste Group Bank and OMV Aktiengesellschaft 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.