Correlation Between Bank of Ireland and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and General Dynamics 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 General Dynamics 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 General Dynamics Corp, you can compare the effects of market volatilities on Bank of Ireland and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and General Dynamics.
Diversification Opportunities for Bank of Ireland and General Dynamics
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and General is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and General Dynamics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics Corp 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics Corp has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and General Dynamics go up and down completely randomly.
Pair Corralation between Bank of Ireland and General Dynamics
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.57 times less return on investment than General Dynamics. But when comparing it to its historical volatility, Bank of Ireland is 1.66 times less risky than General Dynamics. It trades about 0.03 of its potential returns per unit of risk. General Dynamics Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 23,852 in General Dynamics Corp on September 4, 2024 and sell it today you would earn a total of 3,858 from holding General Dynamics Corp or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Bank of Ireland vs. General Dynamics Corp
Performance |
| Timeline |
| Bank of Ireland |
| General Dynamics Corp |
Bank of Ireland and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and General Dynamics
The main advantage of trading using opposite Bank of Ireland and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Bank of Ireland vs. SupplyMe Capital PLC | Bank of Ireland vs. SM Energy Co | Bank of Ireland vs. FuelCell Energy | Bank of Ireland vs. Grand Vision Media |
| General Dynamics vs. Zegona Communications Plc | General Dynamics vs. Lendinvest PLC | General Dynamics vs. Batm Advanced Communications | General Dynamics vs. Cembra Money Bank |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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