Correlation Between Charter Communications and Bank of Ireland

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

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

Diversification Opportunities for Charter Communications and Bank of Ireland

-0.65

Correlation Coefficient

Charter Communications  Bank of Ireland

Excellent diversification

The 3 months correlation between Charter and Bank is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Charter Communications i.e., Charter Communications and Bank of Ireland go up and down completely randomly.

Pair Corralation between Charter Communications and Bank of Ireland

Assuming the 90 days trading horizon Charter Communications is expected to generate 1.87 times less return on investment than Bank of Ireland. But when comparing it to its historical volatility, Charter Communications Cl is 1.03 times less risky than Bank of Ireland. It trades about 0.01 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  834.00  in Bank of Ireland on September 26, 2024 and sell it today you would earn a total of  46.00  from holding Bank of Ireland or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.4%
Values	Daily Returns

Charter Communications Cl  vs.  Bank of Ireland

Charter Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Charter Communications and Bank of Ireland

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

The idea behind Charter Communications Cl and Bank of Ireland 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.