Correlation Between AIB Group and Major Drilling
Can any of the company-specific risk be diversified away by investing in both AIB Group and Major Drilling 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 AIB Group and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIB Group plc and Major Drilling Group, you can compare the effects of market volatilities on AIB Group and Major Drilling 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 AIB Group with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and Major Drilling.
Diversification Opportunities for AIB Group and Major Drilling
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AIB and Major is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group plc and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and AIB Group 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 AIB Group plc are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of AIB Group i.e., AIB Group and Major Drilling go up and down completely randomly.
Pair Corralation between AIB Group and Major Drilling
Assuming the 90 days trading horizon AIB Group plc is expected to generate 0.84 times more return on investment than Major Drilling. However, AIB Group plc is 1.19 times less risky than Major Drilling. It trades about 0.05 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.02 per unit of risk. If you would invest 355.00 in AIB Group plc on September 30, 2024 and sell it today you would earn a total of 174.00 from holding AIB Group plc or generate 49.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIB Group plc vs. Major Drilling Group
Performance |
| Timeline |
| AIB Group plc |
| Major Drilling Group |
AIB Group and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIB Group and Major Drilling
The main advantage of trading using opposite AIB Group and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIB Group position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| AIB Group vs. EVS Broadcast Equipment | AIB Group vs. CAL MAINE FOODS | AIB Group vs. Gaztransport Technigaz SA | AIB Group vs. SENECA FOODS A |
| Major Drilling vs. BHP Group Limited | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Vale SA |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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