Correlation Between Bank of Ireland and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and SBM Offshore 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 SBM Offshore 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 SBM Offshore NV, you can compare the effects of market volatilities on Bank of Ireland and SBM Offshore 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 SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and SBM Offshore.
Diversification Opportunities for Bank of Ireland and SBM Offshore
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and SBM is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and SBM Offshore go up and down completely randomly.
Pair Corralation between Bank of Ireland and SBM Offshore
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.21 times less return on investment than SBM Offshore. In addition to that, Bank of Ireland is 1.36 times more volatile than SBM Offshore NV. It trades about 0.03 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.04 per unit of volatility. If you would invest 1,328 in SBM Offshore NV on August 29, 2024 and sell it today you would earn a total of 449.00 from holding SBM Offshore NV or generate 33.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank of Ireland vs. SBM Offshore NV
Performance |
| Timeline |
| Bank of Ireland |
| SBM Offshore NV |
Bank of Ireland and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and SBM Offshore
The main advantage of trading using opposite Bank of Ireland and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore'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 |
| SBM Offshore vs. MyHealthChecked Plc | SBM Offshore vs. Eco Animal Health | SBM Offshore vs. X FAB Silicon Foundries | SBM Offshore vs. Datalogic |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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