Correlation Between Bank of Ireland and Glenveagh Properties

Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Glenveagh Properties 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 Glenveagh Properties 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 Glenveagh Properties PLC, you can compare the effects of market volatilities on Bank of Ireland and Glenveagh Properties 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 Glenveagh Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Glenveagh Properties.

Diversification Opportunities for Bank of Ireland and Glenveagh Properties

0.17

Correlation Coefficient

Bank of Ireland  Glenveagh Properties

Average diversification

The 3 months correlation between Bank and Glenveagh is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Glenveagh Properties PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glenveagh Properties PLC 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 Glenveagh Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glenveagh Properties PLC has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Glenveagh Properties go up and down completely randomly.

Pair Corralation between Bank of Ireland and Glenveagh Properties

Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.06 times more return on investment than Glenveagh Properties. However, Bank of Ireland is 1.06 times more volatile than Glenveagh Properties PLC. It trades about 0.28 of its potential returns per unit of risk. Glenveagh Properties PLC is currently generating about 0.0 per unit of risk. If you would invest  828.00  in Bank of Ireland on November 28, 2024 and sell it today you would earn a total of  282.00  from holding Bank of Ireland or generate 34.06% return on investment over 90 days.

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

Bank of Ireland  vs.  Glenveagh Properties PLC

Bank of Ireland

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Ireland are ranked lower than 22 (%) 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.

Glenveagh Properties PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glenveagh Properties PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Glenveagh Properties is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank of Ireland and Glenveagh Properties

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

The idea behind Bank of Ireland and Glenveagh Properties PLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.