Correlation Between Irish Residential and Glanbia PLC

Can any of the company-specific risk be diversified away by investing in both Irish Residential and Glanbia PLC 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 Irish Residential and Glanbia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Irish Residential and Glanbia PLC

0.04

Correlation Coefficient

Irish Residential  Glanbia PLC

Significant diversification

The 3 months correlation between Irish and Glanbia is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Irish Residential Properties and Glanbia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glanbia PLC and Irish Residential 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 Irish Residential Properties are associated (or correlated) with Glanbia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glanbia PLC has no effect on the direction of Irish Residential i.e., Irish Residential and Glanbia PLC go up and down completely randomly.

Pair Corralation between Irish Residential and Glanbia PLC

Assuming the 90 days trading horizon Irish Residential Properties is expected to generate 0.45 times more return on investment than Glanbia PLC. However, Irish Residential Properties is 2.23 times less risky than Glanbia PLC. It trades about 0.04 of its potential returns per unit of risk. Glanbia PLC is currently generating about -0.09 per unit of risk. If you would invest  91.00  in Irish Residential Properties on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Irish Residential Properties or generate 3.3% return on investment over 90 days.

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

Irish Residential Properties  vs.  Glanbia PLC

Irish Residential

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Irish Residential Properties are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Irish Residential is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Glanbia PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glanbia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Irish Residential and Glanbia PLC

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

The idea behind Irish Residential Properties and Glanbia 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.