Correlation Between Auburn Bancorp and Permanent TSB

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

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

Diversification Opportunities for Auburn Bancorp and Permanent TSB

-0.07

Correlation Coefficient

Auburn Bancorp  Permanent TSB

Good diversification

The 3 months correlation between Auburn and Permanent is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Auburn Bancorp and Permanent TSB Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permanent TSB Group and Auburn Bancorp 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 Auburn Bancorp are associated (or correlated) with Permanent TSB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permanent TSB Group has no effect on the direction of Auburn Bancorp i.e., Auburn Bancorp and Permanent TSB go up and down completely randomly.

Pair Corralation between Auburn Bancorp and Permanent TSB

Given the investment horizon of 90 days Auburn Bancorp is expected to generate 15.68 times less return on investment than Permanent TSB. But when comparing it to its historical volatility, Auburn Bancorp is 1.49 times less risky than Permanent TSB. It trades about 0.01 of its potential returns per unit of risk. Permanent TSB Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  155.00  in Permanent TSB Group on December 29, 2024 and sell it today you would earn a total of  40.00  from holding Permanent TSB Group or generate 25.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Auburn Bancorp  vs.  Permanent TSB Group

Auburn Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auburn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Auburn Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Permanent TSB Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Permanent TSB Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Permanent TSB showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auburn Bancorp and Permanent TSB

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

The idea behind Auburn Bancorp and Permanent TSB Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..