Correlation Between AIB Group and Uniphar Group
Can any of the company-specific risk be diversified away by investing in both AIB Group and Uniphar Group 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 Uniphar Group 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 Uniphar Group PLC, you can compare the effects of market volatilities on AIB Group and Uniphar Group 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 Uniphar Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and Uniphar Group.
Diversification Opportunities for AIB Group and Uniphar Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AIB and Uniphar is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group PLC and Uniphar Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniphar Group PLC 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 Uniphar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniphar Group PLC has no effect on the direction of AIB Group i.e., AIB Group and Uniphar Group go up and down completely randomly.
Pair Corralation between AIB Group and Uniphar Group
If you would invest 369.00 in AIB Group PLC on December 8, 2024 and sell it today you would earn a total of 330.00 from holding AIB Group PLC or generate 89.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIB Group PLC vs. Uniphar Group PLC
Performance |
| Timeline |
| AIB Group PLC |
| Uniphar Group PLC |
AIB Group and Uniphar Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIB Group and Uniphar Group
The main advantage of trading using opposite AIB Group and Uniphar Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIB Group position performs unexpectedly, Uniphar Group 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 Uniphar Group will offset losses from the drop in Uniphar Group's long position.| AIB Group vs. Bank of Ireland | ||
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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