Correlation Between AIB Group and Commerzbank
Can any of the company-specific risk be diversified away by investing in both AIB Group and Commerzbank 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 Commerzbank 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 Commerzbank AG, you can compare the effects of market volatilities on AIB Group and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and Commerzbank.
Diversification Opportunities for AIB Group and Commerzbank
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AIB and Commerzbank is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group plc and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of AIB Group i.e., AIB Group and Commerzbank go up and down completely randomly.
Pair Corralation between AIB Group and Commerzbank
Assuming the 90 days horizon AIB Group plc is expected to generate 1.3 times more return on investment than Commerzbank. However, AIB Group is 1.3 times more volatile than Commerzbank AG. It trades about 0.06 of its potential returns per unit of risk. Commerzbank AG is currently generating about 0.07 per unit of risk. If you would invest 278.00 in AIB Group plc on August 26, 2024 and sell it today you would earn a total of 261.00 from holding AIB Group plc or generate 93.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIB Group plc vs. Commerzbank AG
Performance |
| Timeline |
| AIB Group plc |
| Commerzbank AG |
AIB Group and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIB Group and Commerzbank
The main advantage of trading using opposite AIB Group and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIB Group position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| AIB Group vs. Qurate Retail Series | AIB Group vs. COSTCO WHOLESALE CDR | AIB Group vs. National Beverage Corp | AIB Group vs. Caseys General Stores |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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