Correlation Between Bank of Ireland and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Fortune Brands 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 Fortune Brands 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 Fortune Brands Home, you can compare the effects of market volatilities on Bank of Ireland and Fortune Brands 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 Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Fortune Brands.
Diversification Opportunities for Bank of Ireland and Fortune Brands
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Fortune is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Fortune Brands go up and down completely randomly.
Pair Corralation between Bank of Ireland and Fortune Brands
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.2 times more return on investment than Fortune Brands. However, Bank of Ireland is 1.2 times more volatile than Fortune Brands Home. It trades about 0.07 of its potential returns per unit of risk. Fortune Brands Home is currently generating about -0.47 per unit of risk. If you would invest 841.00 in Bank of Ireland on September 24, 2024 and sell it today you would earn a total of 23.00 from holding Bank of Ireland or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Bank of Ireland vs. Fortune Brands Home
Performance |
| Timeline |
| Bank of Ireland |
| Fortune Brands Home |
Bank of Ireland and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and Fortune Brands
The main advantage of trading using opposite Bank of Ireland and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Bank of Ireland vs. FC Investment Trust | Bank of Ireland vs. Diversified Energy | Bank of Ireland vs. Smithson Investment Trust | Bank of Ireland vs. Kinnevik Investment AB |
| Fortune Brands vs. Sydbank | Fortune Brands vs. UNIQA Insurance Group | Fortune Brands vs. Bank of Ireland | Fortune Brands vs. Zoom Video Communications |
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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