Correlation Between Bank of Ireland and Origin Enterprises
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Origin Enterprises 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 Bank of Ireland and Origin Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Ireland and Origin Enterprises Plc, you can compare the effects of market volatilities on Bank of Ireland and Origin Enterprises 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 Bank of Ireland with a short position of Origin Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Origin Enterprises.
Diversification Opportunities for Bank of Ireland and Origin Enterprises
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Origin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Origin Enterprises Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Enterprises Plc and Bank of Ireland 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 Bank of Ireland are associated (or correlated) with Origin Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Enterprises Plc has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Origin Enterprises go up and down completely randomly.
Pair Corralation between Bank of Ireland and Origin Enterprises
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.07 times more return on investment than Origin Enterprises. However, Bank of Ireland is 1.07 times more volatile than Origin Enterprises Plc. It trades about -0.11 of its potential returns per unit of risk. Origin Enterprises Plc is currently generating about -0.18 per unit of risk. If you would invest 891.00 in Bank of Ireland on August 24, 2024 and sell it today you would lose (48.00) from holding Bank of Ireland or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Ireland vs. Origin Enterprises Plc
Performance |
| Timeline |
| Bank of Ireland |
| Origin Enterprises Plc |
Bank of Ireland and Origin Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and Origin Enterprises
The main advantage of trading using opposite Bank of Ireland and Origin Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, Origin Enterprises 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 Origin Enterprises will offset losses from the drop in Origin Enterprises' long position.| Bank of Ireland vs. Kingspan Group plc | Bank of Ireland vs. Glanbia PLC | Bank of Ireland vs. Ryanair Holdings plc |
| Origin Enterprises vs. Glanbia PLC | Origin Enterprises vs. Kerry Group | Origin Enterprises vs. FBD Holdings PLC | Origin Enterprises vs. Dalata Hotel Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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