Correlation Between Bank of Ireland and Centaur Media
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Centaur Media 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 Centaur Media 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 Centaur Media, you can compare the effects of market volatilities on Bank of Ireland and Centaur Media 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 Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Centaur Media.
Diversification Opportunities for Bank of Ireland and Centaur Media
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Centaur is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Centaur Media go up and down completely randomly.
Pair Corralation between Bank of Ireland and Centaur Media
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 0.96 times more return on investment than Centaur Media. However, Bank of Ireland is 1.04 times less risky than Centaur Media. It trades about 0.01 of its potential returns per unit of risk. Centaur Media is currently generating about -0.04 per unit of risk. If you would invest 841.00 in Bank of Ireland on August 31, 2024 and sell it today you would lose (9.00) from holding Bank of Ireland or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Bank of Ireland vs. Centaur Media
Performance |
| Timeline |
| Bank of Ireland |
| Centaur Media |
Bank of Ireland and Centaur Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and Centaur Media
The main advantage of trading using opposite Bank of Ireland and Centaur Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, Centaur Media 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 Centaur Media will offset losses from the drop in Centaur Media's long position.| Bank of Ireland vs. Samsung Electronics Co | Bank of Ireland vs. Samsung Electronics Co | Bank of Ireland vs. Hyundai Motor | Bank of Ireland vs. Toyota Motor Corp |
| Centaur Media vs. Cornish Metals | Centaur Media vs. Silvercorp Metals | Centaur Media vs. HCA Healthcare | Centaur Media vs. Target Healthcare REIT |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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