Correlation Between Bank of Ireland and UNIQA Insurance
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and UNIQA Insurance 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 UNIQA Insurance 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 UNIQA Insurance Group, you can compare the effects of market volatilities on Bank of Ireland and UNIQA Insurance 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 UNIQA Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and UNIQA Insurance.
Diversification Opportunities for Bank of Ireland and UNIQA Insurance
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and UNIQA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group 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 UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and UNIQA Insurance go up and down completely randomly.
Pair Corralation between Bank of Ireland and UNIQA Insurance
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 2.96 times more return on investment than UNIQA Insurance. However, Bank of Ireland is 2.96 times more volatile than UNIQA Insurance Group. It trades about 0.02 of its potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.06 per unit of risk. If you would invest 917.00 in Bank of Ireland on November 21, 2024 and sell it today you would earn a total of 91.00 from holding Bank of Ireland or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.59% |
| Values | Daily Returns |
Bank of Ireland vs. UNIQA Insurance Group
Performance |
| Timeline |
| Bank of Ireland |
| UNIQA Insurance Group |
Bank of Ireland and UNIQA Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and UNIQA Insurance
The main advantage of trading using opposite Bank of Ireland and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, UNIQA Insurance 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 UNIQA Insurance will offset losses from the drop in UNIQA Insurance's long position.| Bank of Ireland vs. Spirent Communications plc | Bank of Ireland vs. Auction Technology Group | Bank of Ireland vs. Spotify Technology SA | Bank of Ireland vs. Cellnex Telecom SA |
| UNIQA Insurance vs. National Beverage Corp | UNIQA Insurance vs. Molson Coors Beverage | UNIQA Insurance vs. Eco Animal Health | UNIQA Insurance vs. Fevertree Drinks Plc |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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