Correlation Between National Bank and Eurobank Ergasias

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

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

Diversification Opportunities for National Bank and Eurobank Ergasias

0.86

Correlation Coefficient

National Bank  Eurobank Ergasias

Very poor diversification

The 3 months correlation between National and Eurobank is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Eurobank Ergasias SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and National Bank 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 National Bank of are associated (or correlated) with Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of National Bank i.e., National Bank and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between National Bank and Eurobank Ergasias

Assuming the 90 days horizon National Bank of is expected to generate 0.58 times more return on investment than Eurobank Ergasias. However, National Bank of is 1.73 times less risky than Eurobank Ergasias. It trades about 0.26 of its potential returns per unit of risk. Eurobank Ergasias SA is currently generating about 0.14 per unit of risk. If you would invest  792.00  in National Bank of on December 30, 2024 and sell it today you would earn a total of  273.00  from holding National Bank of or generate 34.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

National Bank of  vs.  Eurobank Ergasias SA

National Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Eurobank Ergasias

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Eurobank Ergasias showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and Eurobank Ergasias

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

The idea behind National Bank of and Eurobank Ergasias SA 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.