Correlation Between Permanent TSB and Commercial International

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

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

Diversification Opportunities for Permanent TSB and Commercial International

0.07

Correlation Coefficient

Permanent TSB  Commercial International

Significant diversification

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

Pair Corralation between Permanent TSB and Commercial International

Assuming the 90 days horizon Permanent TSB Group is expected to under-perform the Commercial International. In addition to that, Permanent TSB is 1.42 times more volatile than Commercial International Bank. It trades about -0.05 of its total potential returns per unit of risk. Commercial International Bank is currently generating about -0.06 per unit of volatility. If you would invest  164.00  in Commercial International Bank on September 13, 2024 and sell it today you would lose (12.00) from holding Commercial International Bank or give up 7.32% of portfolio value over 90 days.

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

Permanent TSB Group  vs.  Commercial International Bank

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.

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 fragile 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.

Pair Trading with Permanent TSB and Commercial International

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

The idea behind Permanent TSB Group and Commercial International Bank 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.