Correlation Between POSBO UNSPADRS/20YC1 and ERSTE GP

Can any of the company-specific risk be diversified away by investing in both POSBO UNSPADRS/20YC1 and ERSTE GP 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 POSBO UNSPADRS/20YC1 and ERSTE GP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between POSBO UNSPADRS20YC1 and ERSTE GP BNK, you can compare the effects of market volatilities on POSBO UNSPADRS/20YC1 and ERSTE GP 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 POSBO UNSPADRS/20YC1 with a short position of ERSTE GP. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSBO UNSPADRS/20YC1 and ERSTE GP.

Diversification Opportunities for POSBO UNSPADRS/20YC1 and ERSTE GP

0.83

Correlation Coefficient

POSBO UNSPADRS/20YC1  ERSTE GP

Very poor diversification

The 3 months correlation between POSBO and ERSTE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding POSBO UNSPADRS20YC1 and ERSTE GP BNK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERSTE GP BNK and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS20YC1 are associated (or correlated) with ERSTE GP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERSTE GP BNK has no effect on the direction of POSBO UNSPADRS/20YC1 i.e., POSBO UNSPADRS/20YC1 and ERSTE GP go up and down completely randomly.

Pair Corralation between POSBO UNSPADRS/20YC1 and ERSTE GP

Assuming the 90 days trading horizon POSBO UNSPADRS/20YC1 is expected to generate 1.66 times less return on investment than ERSTE GP. But when comparing it to its historical volatility, POSBO UNSPADRS20YC1 is 1.24 times less risky than ERSTE GP. It trades about 0.16 of its potential returns per unit of risk. ERSTE GP BNK is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,947  in ERSTE GP BNK on April 23, 2025 and sell it today you would earn a total of  853.00  from holding ERSTE GP BNK or generate 28.94% return on investment over 90 days.

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

POSBO UNSPADRS20YC1  vs.  ERSTE GP BNK

POSBO UNSPADRS/20YC1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, POSBO UNSPADRS/20YC1 reported solid returns over the last few months and may actually be approaching a breakup point.

ERSTE GP BNK

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ERSTE GP BNK are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ERSTE GP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSBO UNSPADRS/20YC1 and ERSTE GP

The main advantage of trading using opposite POSBO UNSPADRS/20YC1 and ERSTE GP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSBO UNSPADRS/20YC1 position performs unexpectedly, ERSTE GP 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 ERSTE GP will offset losses from the drop in ERSTE GP's long position.

The idea behind POSBO UNSPADRS20YC1 and ERSTE GP BNK 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.