Correlation Between Bank of Ireland and TBC Bank
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and TBC Bank 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 TBC Bank 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 TBC Bank Group, you can compare the effects of market volatilities on Bank of Ireland and TBC Bank 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 TBC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and TBC Bank.
Diversification Opportunities for Bank of Ireland and TBC Bank
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and TBC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and TBC Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBC Bank Group 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 TBC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBC Bank Group has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and TBC Bank go up and down completely randomly.
Pair Corralation between Bank of Ireland and TBC Bank
Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.13 times less return on investment than TBC Bank. But when comparing it to its historical volatility, Bank of Ireland is 1.22 times less risky than TBC Bank. It trades about 0.38 of its potential returns per unit of risk. TBC Bank Group is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 305,500 in TBC Bank Group on November 8, 2024 and sell it today you would earn a total of 46,000 from holding TBC Bank Group or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Ireland vs. TBC Bank Group
Performance |
| Timeline |
| Bank of Ireland |
| TBC Bank Group |
Bank of Ireland and TBC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and TBC Bank
The main advantage of trading using opposite Bank of Ireland and TBC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, TBC Bank 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 TBC Bank will offset losses from the drop in TBC Bank's long position.| Bank of Ireland vs. Amedeo Air Four | Bank of Ireland vs. Systemair AB | Bank of Ireland vs. Central Asia Metals | Bank of Ireland vs. Fair Oaks Income |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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