Correlation Between Banco Do and AIB Group
Can any of the company-specific risk be diversified away by investing in both Banco Do 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 Banco Do and AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Brasil and AIB Group plc, you can compare the effects of market volatilities on Banco Do 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 Banco Do with a short position of AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and AIB Group.
Diversification Opportunities for Banco Do and AIB Group
Poor diversification
The 3 months correlation between Banco and AIB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil 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 Banco Do 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 Banco do Brasil 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 Banco Do i.e., Banco Do and AIB Group go up and down completely randomly.
Pair Corralation between Banco Do and AIB Group
Assuming the 90 days trading horizon Banco Do is expected to generate 1.31 times less return on investment than AIB Group. But when comparing it to its historical volatility, Banco do Brasil is 1.59 times less risky than AIB Group. It trades about 0.07 of its potential returns per unit of risk. AIB Group plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 633.00 in AIB Group plc on September 3, 2024 and sell it today you would earn a total of 463.00 from holding AIB Group plc or generate 73.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.0% |
| Values | Daily Returns |
Banco do Brasil vs. AIB Group plc
Performance |
| Timeline |
| Banco do Brasil |
| AIB Group plc |
Banco Do and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and AIB Group
The main advantage of trading using opposite Banco Do and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do 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.| Banco Do vs. Banco Bradesco SA | Banco Do vs. Petrleo Brasileiro SA | Banco Do vs. Ita Unibanco Holding | Banco Do vs. Itasa Investimentos |
| AIB Group vs. Plumas Bancorp | AIB Group vs. Merchants Bancorp | AIB Group vs. BancFirst | AIB Group vs. BBVA Banco Frances |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |