Correlation Between Bank of Ireland and Ametek
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Ametek 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 Ametek 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 Ametek Inc, you can compare the effects of market volatilities on Bank of Ireland and Ametek 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 Ametek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Ametek.
Diversification Opportunities for Bank of Ireland and Ametek
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Ametek is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc 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 Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Ametek go up and down completely randomly.
Pair Corralation between Bank of Ireland and Ametek
Assuming the 90 days trading horizon Bank of Ireland is expected to under-perform the Ametek. In addition to that, Bank of Ireland is 1.62 times more volatile than Ametek Inc. It trades about -0.02 of its total potential returns per unit of risk. Ametek Inc is currently generating about 0.13 per unit of volatility. If you would invest 16,673 in Ametek Inc on September 12, 2024 and sell it today you would earn a total of 2,216 from holding Ametek Inc or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Ireland vs. Ametek Inc
Performance |
| Timeline |
| Bank of Ireland |
| Ametek Inc |
Bank of Ireland and Ametek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and Ametek
The main advantage of trading using opposite Bank of Ireland and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, Ametek 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 Ametek will offset losses from the drop in Ametek's long position.| Bank of Ireland vs. Microchip Technology | Bank of Ireland vs. Polar Capital Technology | Bank of Ireland vs. Spotify Technology SA | Bank of Ireland vs. SMA Solar Technology |
| Ametek vs. mobilezone holding AG | Ametek vs. Silvercorp Metals | Ametek vs. Aeorema Communications Plc | Ametek vs. Bisichi Mining 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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