Correlation Between Bank of Ireland and Sparebank
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Sparebank 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 Sparebank 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 Sparebank 1 SR, you can compare the effects of market volatilities on Bank of Ireland and Sparebank 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 Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Sparebank.
Diversification Opportunities for Bank of Ireland and Sparebank
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Sparebank is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Sparebank go up and down completely randomly.
Pair Corralation between Bank of Ireland and Sparebank
Assuming the 90 days trading horizon Bank of Ireland is expected to under-perform the Sparebank. In addition to that, Bank of Ireland is 2.3 times more volatile than Sparebank 1 SR. It trades about -0.09 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.13 per unit of volatility. If you would invest 13,160 in Sparebank 1 SR on September 4, 2024 and sell it today you would earn a total of 1,210 from holding Sparebank 1 SR or generate 9.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of Ireland vs. Sparebank 1 SR
Performance |
Timeline |
Bank of Ireland |
Sparebank 1 SR |
Bank of Ireland and Sparebank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of Ireland and Sparebank
The main advantage of trading using opposite Bank of Ireland and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.Bank of Ireland vs. SupplyMe Capital PLC | Bank of Ireland vs. SM Energy Co | Bank of Ireland vs. FuelCell Energy | Bank of Ireland vs. Grand Vision Media |
Sparebank vs. Samsung Electronics Co | Sparebank vs. Samsung Electronics Co | Sparebank vs. Hyundai Motor | Sparebank vs. Toyota Motor Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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