Correlation Between AIB Group and Kerry
Can any of the company-specific risk be diversified away by investing in both AIB Group and Kerry 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 Kerry 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 Kerry Group, you can compare the effects of market volatilities on AIB Group and Kerry 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 Kerry. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and Kerry.
Diversification Opportunities for AIB Group and Kerry
Excellent diversification
The 3 months correlation between AIB and Kerry is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group PLC and Kerry Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry 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 Kerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Group has no effect on the direction of AIB Group i.e., AIB Group and Kerry go up and down completely randomly.
Pair Corralation between AIB Group and Kerry
Assuming the 90 days trading horizon AIB Group is expected to generate 1.87 times less return on investment than Kerry. In addition to that, AIB Group is 1.41 times more volatile than Kerry Group. It trades about 0.02 of its total potential returns per unit of risk. Kerry Group is currently generating about 0.06 per unit of volatility. If you would invest 7,810 in Kerry Group on August 24, 2024 and sell it today you would earn a total of 785.00 from holding Kerry Group or generate 10.05% 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. Kerry Group
Performance |
| Timeline |
| AIB Group PLC |
| Kerry Group |
AIB Group and Kerry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIB Group and Kerry
The main advantage of trading using opposite AIB Group and Kerry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIB Group position performs unexpectedly, Kerry 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 Kerry will offset losses from the drop in Kerry's long position.| AIB Group vs. Bank of Ireland | AIB Group vs. Glanbia PLC | AIB Group vs. Kingspan Group plc | AIB Group vs. Ryanair Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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