Correlation Between AIB Group and National Bank
Can any of the company-specific risk be diversified away by investing in both AIB Group and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on AIB Group and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and National Bank.
Diversification Opportunities for AIB Group and National Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIB and National is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group PLC and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of AIB Group i.e., AIB Group and National Bank go up and down completely randomly.
Pair Corralation between AIB Group and National Bank
If you would invest 804.00 in National Bank of on October 22, 2024 and sell it today you would earn a total of 36.00 from holding National Bank of or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.56% |
| Values | Daily Returns |
AIB Group PLC vs. National Bank of
Performance |
| Timeline |
| AIB Group PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| National Bank |
AIB Group and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIB Group and National Bank
The main advantage of trading using opposite AIB Group and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIB Group position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.The idea behind AIB Group PLC and National Bank of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| National Bank vs. Alpha Bank SA | National Bank vs. Eurobank Ergasias SA | National Bank vs. Piraeus Bank SA | National Bank vs. PT Bank Central |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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