Correlation Between Riverview Bancorp and Permanent TSB

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

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

Diversification Opportunities for Riverview Bancorp and Permanent TSB

-0.26

Correlation Coefficient

Riverview Bancorp  Permanent TSB

Very good diversification

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

Pair Corralation between Riverview Bancorp and Permanent TSB

Given the investment horizon of 90 days Riverview Bancorp is expected to under-perform the Permanent TSB. But the stock apears to be less risky and, when comparing its historical volatility, Riverview Bancorp is 2.89 times less risky than Permanent TSB. The stock trades about -0.1 of its potential returns per unit of risk. The Permanent TSB Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  155.00  in Permanent TSB Group on December 23, 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

Riverview Bancorp  vs.  Permanent TSB Group

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.

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.

Pair Trading with Riverview Bancorp and Permanent TSB

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

The idea behind Riverview Bancorp and Permanent TSB Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.