Correlation Between Old Republic and Eurobank Ergasias

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

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

Diversification Opportunities for Old Republic and Eurobank Ergasias

0.71

Correlation Coefficient

Old Republic  Eurobank Ergasias

Poor diversification

The 3 months correlation between Old and Eurobank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Old Republic and Eurobank Ergasias

Considering the 90-day investment horizon Old Republic is expected to generate 5.04 times less return on investment than Eurobank Ergasias. But when comparing it to its historical volatility, Old Republic International is 2.35 times less risky than Eurobank Ergasias. It trades about 0.1 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  173.00  in Eurobank Ergasias Services on March 12, 2024 and sell it today you would earn a total of  62.00  from holding Eurobank Ergasias Services or generate 35.84% return on investment over 90 days.

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

Old Republic International  vs.  Eurobank Ergasias Services

Old Republic Interna

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Old Republic may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Eurobank Ergasias

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Eurobank Ergasias reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Old Republic and Eurobank Ergasias

The main advantage of trading using opposite Old Republic and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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 Old Republic International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.