Correlation Between Permanent TSB and Riverview Bancorp

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

Diversification Opportunities for Permanent TSB and Riverview Bancorp

-0.26

Correlation Coefficient

Permanent TSB  Riverview Bancorp

Very good diversification

The 3 months correlation between Permanent and Riverview is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Permanent TSB Group and Riverview Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverview Bancorp 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 Riverview Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverview Bancorp has no effect on the direction of Permanent TSB i.e., Permanent TSB and Riverview Bancorp go up and down completely randomly.

Pair Corralation between Permanent TSB and Riverview Bancorp

Assuming the 90 days horizon Permanent TSB Group is expected to generate 2.89 times more return on investment than Riverview Bancorp. However, Permanent TSB is 2.89 times more volatile than Riverview Bancorp. It trades about 0.03 of its potential returns per unit of risk. Riverview Bancorp is currently generating about -0.1 per unit of risk. If you would invest  155.00  in Permanent TSB Group on December 22, 2024 and sell it today you would earn a total of  5.00  from holding Permanent TSB Group or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

Permanent TSB Group  vs.  Riverview Bancorp

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.

Riverview Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Riverview Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Riverview Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Permanent TSB and Riverview Bancorp

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

The idea behind Permanent TSB Group and Riverview Bancorp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.