Correlation Between Nedbank and Eurobank Ergasias

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

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

Diversification Opportunities for Nedbank and Eurobank Ergasias

-0.13

Correlation Coefficient

Nedbank  Eurobank Ergasias

Good diversification

The 3 months correlation between Nedbank and Eurobank is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nedbank Group and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Nedbank 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 Nedbank Group 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 Nedbank i.e., Nedbank and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Nedbank and Eurobank Ergasias

Assuming the 90 days horizon Nedbank Group is expected to generate 2.57 times more return on investment than Eurobank Ergasias. However, Nedbank is 2.57 times more volatile than Eurobank Ergasias Services. It trades about 0.01 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about -0.19 per unit of risk. If you would invest  1,616  in Nedbank Group on August 30, 2024 and sell it today you would earn a total of  8.00  from holding Nedbank Group or generate 0.5% return on investment over 90 days.

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

Nedbank Group  vs.  Eurobank Ergasias Services

Nedbank Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Nedbank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Nedbank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eurobank Ergasias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurobank Ergasias Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nedbank and Eurobank Ergasias

The main advantage of trading using opposite Nedbank and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nedbank 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 Nedbank Group 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 CEOs Directory module to screen CEOs from public companies around the world.