Correlation Between Commercial International and Permanent TSB

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

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

Diversification Opportunities for Commercial International and Permanent TSB

-0.01

Correlation Coefficient

Commercial International  Permanent TSB

Good diversification

The 3 months correlation between Commercial and Permanent is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank 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 Commercial International 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 Commercial International Bank 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 Commercial International i.e., Commercial International and Permanent TSB go up and down completely randomly.

Pair Corralation between Commercial International and Permanent TSB

Assuming the 90 days horizon Commercial International Bank is expected to generate 0.68 times more return on investment than Permanent TSB. However, Commercial International Bank is 1.47 times less risky than Permanent TSB. It trades about -0.07 of its potential returns per unit of risk. Permanent TSB Group is currently generating about -0.05 per unit of risk. If you would invest  167.00  in Commercial International Bank on September 5, 2024 and sell it today you would lose (13.00) from holding Commercial International Bank or give up 7.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Commercial International Bank  vs.  Permanent TSB Group

Commercial International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial International Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Permanent TSB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Permanent TSB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Commercial International and Permanent TSB

The main advantage of trading using opposite Commercial International and Permanent TSB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial International 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 Commercial International Bank 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.