Correlation Between Resona Holdings and Eurobank Ergasias

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

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

Diversification Opportunities for Resona Holdings and Eurobank Ergasias

-0.23

Correlation Coefficient

Resona Holdings  Eurobank Ergasias

Very good diversification

The 3 months correlation between Resona and Eurobank is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Resona Holdings and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Resona Holdings 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 Resona Holdings 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 Resona Holdings i.e., Resona Holdings and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Resona Holdings and Eurobank Ergasias

Assuming the 90 days horizon Resona Holdings is expected to generate 4.55 times more return on investment than Eurobank Ergasias. However, Resona Holdings is 4.55 times more volatile than Eurobank Ergasias Services. It trades about 0.08 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.05 per unit of risk. If you would invest  656.00  in Resona Holdings on October 11, 2024 and sell it today you would earn a total of  105.00  from holding Resona Holdings or generate 16.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.77%
Values	Daily Returns

Resona Holdings  vs.  Eurobank Ergasias Services

Resona Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resona Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Resona Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Eurobank Ergasias

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Eurobank Ergasias is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Resona Holdings and Eurobank Ergasias

The main advantage of trading using opposite Resona Holdings and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resona Holdings 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 Resona Holdings and Eurobank Ergasias Services 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.