Correlation Between Permanent TSB and Nmb Financial

Can any of the company-specific risk be diversified away by investing in both Permanent TSB and Nmb Financial 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 Nmb Financial 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 Nmb Financial Corp, you can compare the effects of market volatilities on Permanent TSB and Nmb Financial 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 Nmb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permanent TSB and Nmb Financial.

Diversification Opportunities for Permanent TSB and Nmb Financial

0.25

Correlation Coefficient

Permanent TSB  Nmb Financial

Modest diversification

The 3 months correlation between Permanent and Nmb is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Permanent TSB Group and Nmb Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nmb Financial Corp 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 Nmb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nmb Financial Corp has no effect on the direction of Permanent TSB i.e., Permanent TSB and Nmb Financial go up and down completely randomly.

Pair Corralation between Permanent TSB and Nmb Financial

Assuming the 90 days horizon Permanent TSB Group is expected to generate 1.84 times more return on investment than Nmb Financial. However, Permanent TSB is 1.84 times more volatile than Nmb Financial Corp. It trades about 0.12 of its potential returns per unit of risk. Nmb Financial Corp is currently generating about 0.02 per unit of risk. If you would invest  155.00  in Permanent TSB Group on December 28, 2024 and sell it today you would earn a total of  40.00  from holding Permanent TSB Group or generate 25.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Permanent TSB Group  vs.  Nmb Financial Corp

Permanent TSB Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Permanent TSB Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Permanent TSB showed solid returns over the last few months and may actually be approaching a breakup point.

Nmb Financial Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nmb Financial Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Nmb Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Permanent TSB and Nmb Financial

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

The idea behind Permanent TSB Group and Nmb Financial Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.