Correlation Between Eurobank Ergasias and Eastern Michigan

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

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

Diversification Opportunities for Eurobank Ergasias and Eastern Michigan

-0.89

Correlation Coefficient

Eurobank Ergasias  Eastern Michigan

Pay attention - limited upside

The 3 months correlation between Eurobank and Eastern is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Eurobank Ergasias Services 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 Eurobank Ergasias 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 Eurobank Ergasias Services 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 Eurobank Ergasias i.e., Eurobank Ergasias and Eastern Michigan go up and down completely randomly.

Pair Corralation between Eurobank Ergasias and Eastern Michigan

Assuming the 90 days horizon Eurobank Ergasias Services is expected to under-perform the Eastern Michigan. But the pink sheet apears to be less risky and, when comparing its historical volatility, Eurobank Ergasias Services is 2.17 times less risky than Eastern Michigan. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Eastern Michigan Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,050  in Eastern Michigan Financial on September 2, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Eurobank Ergasias Services  vs.  Eastern Michigan Financial

Eurobank Ergasias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurobank Ergasias Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Eastern Michigan Fin

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Michigan Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Eastern Michigan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eurobank Ergasias and Eastern Michigan

The main advantage of trading using opposite Eurobank Ergasias and Eastern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurobank Ergasias 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 Eurobank Ergasias Services 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.