Correlation Between Aozora Bank and AIB Group
Can any of the company-specific risk be diversified away by investing in both Aozora Bank and AIB 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 Aozora Bank and AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aozora Bank and AIB Group PLC, you can compare the effects of market volatilities on Aozora Bank and AIB 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 Aozora Bank with a short position of AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aozora Bank and AIB Group.
Diversification Opportunities for Aozora Bank and AIB Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aozora and AIB is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aozora Bank and AIB Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group PLC and Aozora Bank 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 Aozora Bank are associated (or correlated) with AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group PLC has no effect on the direction of Aozora Bank i.e., Aozora Bank and AIB Group go up and down completely randomly.
Pair Corralation between Aozora Bank and AIB Group
If you would invest 430.00 in AIB Group PLC on August 29, 2024 and sell it today you would earn a total of 0.00 from holding AIB Group PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aozora Bank vs. AIB Group PLC
Performance |
| Timeline |
| Aozora Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AIB Group PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aozora Bank and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aozora Bank and AIB Group
The main advantage of trading using opposite Aozora Bank and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aozora Bank position performs unexpectedly, AIB 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 AIB Group will offset losses from the drop in AIB Group's long position.| Aozora Bank vs. NETGEAR | Aozora Bank vs. WiMi Hologram Cloud | Aozora Bank vs. SmartStop Self Storage | Aozora Bank vs. Getty Images Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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