Correlation Between Bank of Botetourt and Permanent TSB

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

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

Diversification Opportunities for Bank of Botetourt and Permanent TSB

0.02

Correlation Coefficient

Bank of Botetourt  Permanent TSB

Significant diversification

The 3 months correlation between Bank and Permanent is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Botetourt 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 Bank of Botetourt 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 Botetourt 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 Bank of Botetourt i.e., Bank of Botetourt and Permanent TSB go up and down completely randomly.

Pair Corralation between Bank of Botetourt and Permanent TSB

Given the investment horizon of 90 days Bank of Botetourt is expected to generate 0.32 times more return on investment than Permanent TSB. However, Bank of Botetourt is 3.11 times less risky than Permanent TSB. It trades about 0.13 of its potential returns per unit of risk. Permanent TSB Group is currently generating about 0.03 per unit of risk. If you would invest  3,182  in Bank of Botetourt on December 20, 2024 and sell it today you would earn a total of  193.00  from holding Bank of Botetourt or generate 6.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

Bank of Botetourt  vs.  Permanent TSB Group

Bank of Botetourt

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Botetourt are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Bank of Botetourt may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Permanent TSB Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Permanent TSB Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Permanent TSB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of Botetourt and Permanent TSB

The main advantage of trading using opposite Bank of Botetourt and Permanent TSB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Botetourt 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 Bank of Botetourt 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.