Correlation Between Bank of Ireland and Deutsche Post
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Deutsche Post 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 Deutsche Post 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 Deutsche Post AG, you can compare the effects of market volatilities on Bank of Ireland and Deutsche Post 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 Deutsche Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Deutsche Post.
Diversification Opportunities for Bank of Ireland and Deutsche Post
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Deutsche is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG 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 Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Deutsche Post go up and down completely randomly.
Pair Corralation between Bank of Ireland and Deutsche Post
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.29 times more return on investment than Deutsche Post. However, Bank of Ireland is 1.29 times more volatile than Deutsche Post AG. It trades about -0.11 of its potential returns per unit of risk. Deutsche Post AG is currently generating about -0.23 per unit of risk. If you would invest 883.00 in Bank of Ireland on August 29, 2024 and sell it today you would lose (54.00) from holding Bank of Ireland or give up 6.12% 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. Deutsche Post AG
Performance |
| Timeline |
| Bank of Ireland |
| Deutsche Post AG |
Bank of Ireland and Deutsche Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and Deutsche Post
The main advantage of trading using opposite Bank of Ireland and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, Deutsche Post 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 Deutsche Post will offset losses from the drop in Deutsche Post's long position.| Bank of Ireland vs. Toyota Motor Corp | Bank of Ireland vs. Lendinvest PLC | Bank of Ireland vs. Neometals | Bank of Ireland vs. Coor Service Management |
| Deutsche Post vs. Lendinvest PLC | Deutsche Post vs. Neometals | Deutsche Post vs. Coor Service Management | Deutsche Post vs. Albion Technology General |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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