Correlation Between Catalyst Bancorp and AIB Group

Can any of the company-specific risk be diversified away by investing in both Catalyst Bancorp and AIB Group 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 Catalyst Bancorp and AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Catalyst Bancorp and AIB Group

-0.07

Correlation Coefficient

Catalyst Bancorp  AIB Group

Good diversification

The 3 months correlation between Catalyst and AIB is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Bancorp and AIB Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group PLC and Catalyst Bancorp 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 Catalyst Bancorp are associated (or correlated) with AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group PLC has no effect on the direction of Catalyst Bancorp i.e., Catalyst Bancorp and AIB Group go up and down completely randomly.

Pair Corralation between Catalyst Bancorp and AIB Group

Given the investment horizon of 90 days Catalyst Bancorp is expected to under-perform the AIB Group. But the stock apears to be less risky and, when comparing its historical volatility, Catalyst Bancorp is 1.85 times less risky than AIB Group. The stock trades about -0.01 of its potential returns per unit of risk. The AIB Group PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  375.00  in AIB Group PLC on September 20, 2024 and sell it today you would earn a total of  55.00  from holding AIB Group PLC or generate 14.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.48%
Values	Daily Returns

Catalyst Bancorp  vs.  AIB Group PLC

Catalyst Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Catalyst Bancorp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AIB Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIB Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AIB Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Catalyst Bancorp and AIB Group

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

The idea behind Catalyst Bancorp and AIB Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.