Correlation Between Bank of Ireland and Corre Energy

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

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

Diversification Opportunities for Bank of Ireland and Corre Energy

-0.67

Correlation Coefficient

Bank of Ireland  Corre Energy

Excellent diversification

The 3 months correlation between Bank and Corre is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Corre Energy BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corre Energy BV and Bank of Ireland 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 Bank of Ireland are associated (or correlated) with Corre Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corre Energy BV has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Corre Energy go up and down completely randomly.

Pair Corralation between Bank of Ireland and Corre Energy

Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.65 times less return on investment than Corre Energy. But when comparing it to its historical volatility, Bank of Ireland is 6.74 times less risky than Corre Energy. It trades about 0.18 of its potential returns per unit of risk. Corre Energy BV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Corre Energy BV on December 30, 2024 and sell it today you would lose (2.50) from holding Corre Energy BV or give up 22.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Bank of Ireland  vs.  Corre Energy BV

Bank of Ireland

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Ireland are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank of Ireland reported solid returns over the last few months and may actually be approaching a breakup point.

Corre Energy BV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corre Energy BV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Corre Energy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Ireland and Corre Energy

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

The idea behind Bank of Ireland and Corre Energy BV 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.