Correlation Between Great Western and Irish Continental
Can any of the company-specific risk be diversified away by investing in both Great Western and Irish Continental 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 Great Western and Irish Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Western Mining and Irish Continental Group, you can compare the effects of market volatilities on Great Western and Irish Continental 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 Great Western with a short position of Irish Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Western and Irish Continental.
Diversification Opportunities for Great Western and Irish Continental
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Irish is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Great Western Mining and Irish Continental Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Irish Continental and Great Western 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 Great Western Mining are associated (or correlated) with Irish Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Irish Continental has no effect on the direction of Great Western i.e., Great Western and Irish Continental go up and down completely randomly.
Pair Corralation between Great Western and Irish Continental
Assuming the 90 days trading horizon Great Western Mining is expected to generate 5.07 times more return on investment than Irish Continental. However, Great Western is 5.07 times more volatile than Irish Continental Group. It trades about 0.1 of its potential returns per unit of risk. Irish Continental Group is currently generating about 0.07 per unit of risk. If you would invest 0.05 in Great Western Mining on August 27, 2024 and sell it today you would earn a total of 0.10 from holding Great Western Mining or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Great Western Mining vs. Irish Continental Group
Performance |
| Timeline |
| Great Western Mining |
| Irish Continental |
Great Western and Irish Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Western and Irish Continental
The main advantage of trading using opposite Great Western and Irish Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Western position performs unexpectedly, Irish Continental 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 Irish Continental will offset losses from the drop in Irish Continental's long position.| Great Western vs. KLP Aksje Fremvoksende | Great Western vs. Bank of Ireland | Great Western vs. Donegal Investment Group | Great Western vs. Glenveagh Properties PLC |
| Irish Continental vs. Dalata Hotel Group | Irish Continental vs. Kingspan Group plc | Irish Continental vs. Glanbia PLC |
Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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