Correlation Between IShares Physical and Bank of Ireland

Can any of the company-specific risk be diversified away by investing in both IShares Physical and Bank of Ireland 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 IShares Physical and Bank of Ireland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Physical Silver and Bank of Ireland, you can compare the effects of market volatilities on IShares Physical and Bank of Ireland 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 IShares Physical with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Physical and Bank of Ireland.

Diversification Opportunities for IShares Physical and Bank of Ireland

-0.27

Correlation Coefficient

IShares Physical  Bank of Ireland

Very good diversification

The 3 months correlation between IShares and Bank is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland and IShares Physical 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 iShares Physical Silver are associated (or correlated) with Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of IShares Physical i.e., IShares Physical and Bank of Ireland go up and down completely randomly.

Pair Corralation between IShares Physical and Bank of Ireland

Assuming the 90 days trading horizon iShares Physical Silver is expected to generate 0.72 times more return on investment than Bank of Ireland. However, iShares Physical Silver is 1.39 times less risky than Bank of Ireland. It trades about 0.07 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.09 per unit of risk. If you would invest  2,694  in iShares Physical Silver on September 4, 2024 and sell it today you would earn a total of  212.00  from holding iShares Physical Silver or generate 7.87% return on investment over 90 days.

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

iShares Physical Silver  vs.  Bank of Ireland

iShares Physical Silver

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with IShares Physical and Bank of Ireland

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

The idea behind iShares Physical Silver and Bank of Ireland 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.