Correlation Between TT Electronics and Bank Of

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

By analyzing existing cross correlation between TT Electronics PLC and The Bank of, you can compare the effects of market volatilities on TT Electronics and Bank Of 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 TT Electronics with a short position of Bank Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and Bank Of.

Diversification Opportunities for TT Electronics and Bank Of

0.82

Correlation Coefficient

TT Electronics  Bank Of

Very poor diversification

The 3 months correlation between 7TT and Bank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank and TT Electronics 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 TT Electronics PLC are associated (or correlated) with Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of TT Electronics i.e., TT Electronics and Bank Of go up and down completely randomly.

Pair Corralation between TT Electronics and Bank Of

Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the Bank Of. In addition to that, TT Electronics is 1.76 times more volatile than The Bank of. It trades about -0.56 of its total potential returns per unit of risk. The Bank of is currently generating about -0.06 per unit of volatility. If you would invest  4,996  in The Bank of on October 26, 2024 and sell it today you would lose (58.00) from holding The Bank of or give up 1.16% of portfolio value over 90 days.

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

TT Electronics PLC  vs.  The Bank of

TT Electronics PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TT Electronics PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TT Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

The Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bank Of is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TT Electronics and Bank Of

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

The idea behind TT Electronics PLC and The Bank of 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.