Correlation Between Eurobank Ergasias and Summit Bank

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

Diversification Opportunities for Eurobank Ergasias and Summit Bank

-0.22

Correlation Coefficient

Eurobank Ergasias  Summit Bank

Very good diversification

The 3 months correlation between Eurobank and Summit is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eurobank Ergasias Services and Summit Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bank Group 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 Summit Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bank Group has no effect on the direction of Eurobank Ergasias i.e., Eurobank Ergasias and Summit Bank go up and down completely randomly.

Pair Corralation between Eurobank Ergasias and Summit Bank

Assuming the 90 days horizon Eurobank Ergasias Services is expected to generate 2.19 times more return on investment than Summit Bank. However, Eurobank Ergasias is 2.19 times more volatile than Summit Bank Group. It trades about 0.1 of its potential returns per unit of risk. Summit Bank Group is currently generating about 0.01 per unit of risk. If you would invest  224.00  in Eurobank Ergasias Services on December 21, 2024 and sell it today you would earn a total of  22.00  from holding Eurobank Ergasias Services or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.66%
Values	Daily Returns

Eurobank Ergasias Services  vs.  Summit Bank Group

Eurobank Ergasias

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Eurobank Ergasias reported solid returns over the last few months and may actually be approaching a breakup point.

Summit Bank Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Summit Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Summit Bank is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eurobank Ergasias and Summit Bank

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

The idea behind Eurobank Ergasias Services and Summit Bank Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.