Correlation Between Banco Do and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Banco Do and Bank of Ireland 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 Bank of Ireland 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 Bank of Ireland, you can compare the effects of market volatilities on Banco Do and Bank of Ireland 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 Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Bank of Ireland.
Diversification Opportunities for Banco Do and Bank of Ireland
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Banco Do i.e., Banco Do and Bank of Ireland go up and down completely randomly.
Pair Corralation between Banco Do and Bank of Ireland
Assuming the 90 days trading horizon Banco do Brasil is expected to generate 0.51 times more return on investment than Bank of Ireland. However, Banco do Brasil is 1.95 times less risky than Bank of Ireland. It trades about -0.06 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.04 per unit of risk. If you would invest 2,451 in Banco do Brasil on October 14, 2024 and sell it today you would lose (30.00) from holding Banco do Brasil or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Banco do Brasil vs. Bank of Ireland
Performance |
| Timeline |
| Banco do Brasil |
| Bank of Ireland |
Banco Do and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and Bank of Ireland
The main advantage of trading using opposite Banco Do and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, Bank of Ireland 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 Bank of Ireland will offset losses from the drop in Bank of Ireland'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 |
| Bank of Ireland vs. Alpha Bank SA | Bank of Ireland vs. National Bank of | Bank of Ireland vs. Piraeus Bank SA | Bank of Ireland vs. United Bancorp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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