Correlation Between Traditions Bank and Piraeus Bank

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

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

Diversification Opportunities for Traditions Bank and Piraeus Bank

-0.52

Correlation Coefficient

Traditions Bank  Piraeus Bank

Excellent diversification

The 3 months correlation between Traditions and Piraeus is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Traditions Bank and Piraeus Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Bank SA and Traditions 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 Traditions Bank are associated (or correlated) with Piraeus Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Bank SA has no effect on the direction of Traditions Bank i.e., Traditions Bank and Piraeus Bank go up and down completely randomly.

Pair Corralation between Traditions Bank and Piraeus Bank

Given the investment horizon of 90 days Traditions Bank is expected to generate 1.04 times more return on investment than Piraeus Bank. However, Traditions Bank is 1.04 times more volatile than Piraeus Bank SA. It trades about 0.15 of its potential returns per unit of risk. Piraeus Bank SA is currently generating about -0.07 per unit of risk. If you would invest  2,768  in Traditions Bank on September 3, 2024 and sell it today you would earn a total of  731.00  from holding Traditions Bank or generate 26.41% return on investment over 90 days.

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

Traditions Bank  vs.  Piraeus Bank SA

Traditions Bank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Traditions Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Traditions Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Piraeus Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piraeus Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Traditions Bank and Piraeus Bank

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

The idea behind Traditions Bank and Piraeus Bank 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.