Correlation Between UNICREDIT SPA and ERSTE GP

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

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

Diversification Opportunities for UNICREDIT SPA and ERSTE GP

0.91

Correlation Coefficient

UNICREDIT SPA  ERSTE GP

Almost no diversification

The 3 months correlation between UNICREDIT and ERSTE is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding UNICREDIT SPA ADR 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 UNICREDIT SPA 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 UNICREDIT SPA ADR 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 UNICREDIT SPA i.e., UNICREDIT SPA and ERSTE GP go up and down completely randomly.

Pair Corralation between UNICREDIT SPA and ERSTE GP

Assuming the 90 days trading horizon UNICREDIT SPA is expected to generate 1.6 times less return on investment than ERSTE GP. But when comparing it to its historical volatility, UNICREDIT SPA ADR 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 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,985  in ERSTE GP BNK on April 24, 2025 and sell it today you would earn a total of  815.00  from holding ERSTE GP BNK or generate 27.3% return on investment over 90 days.

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

UNICREDIT SPA ADR  vs.  ERSTE GP BNK

UNICREDIT SPA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNICREDIT SPA ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, UNICREDIT SPA reported solid returns over the last few months and may actually be approaching a breakup point.

ERSTE GP BNK

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ERSTE GP BNK are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ERSTE GP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNICREDIT SPA and ERSTE GP

The main advantage of trading using opposite UNICREDIT SPA and ERSTE GP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNICREDIT SPA 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 UNICREDIT SPA ADR 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.