Correlation Between Marfin Investment and Bank of Greece

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

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

Diversification Opportunities for Marfin Investment and Bank of Greece

-0.64

Correlation Coefficient

Marfin Investment  Bank of Greece

Excellent diversification

The 3 months correlation between Marfin and Bank is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Marfin Investment Group and Bank of Greece in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Greece and Marfin Investment 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 Marfin Investment Group are associated (or correlated) with Bank of Greece. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Greece has no effect on the direction of Marfin Investment i.e., Marfin Investment and Bank of Greece go up and down completely randomly.

Pair Corralation between Marfin Investment and Bank of Greece

Assuming the 90 days trading horizon Marfin Investment is expected to generate 2.48 times less return on investment than Bank of Greece. In addition to that, Marfin Investment is 1.4 times more volatile than Bank of Greece. It trades about 0.09 of its total potential returns per unit of risk. Bank of Greece is currently generating about 0.3 per unit of volatility. If you would invest  1,420  in Bank of Greece on October 10, 2024 and sell it today you would earn a total of  65.00  from holding Bank of Greece or generate 4.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Marfin Investment Group  vs.  Bank of Greece

Marfin Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marfin Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bank of Greece

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Greece are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bank of Greece unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marfin Investment and Bank of Greece

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

The idea behind Marfin Investment Group and Bank of Greece 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.