Correlation Between Bank of Ireland and First Capital
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and First Capital 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 First Capital 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 First Capital, you can compare the effects of market volatilities on Bank of Ireland and First Capital 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 First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and First Capital.
Diversification Opportunities for Bank of Ireland and First Capital
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital 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 First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and First Capital go up and down completely randomly.
Pair Corralation between Bank of Ireland and First Capital
Assuming the 90 days horizon Bank of Ireland is expected to under-perform the First Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank of Ireland is 1.05 times less risky than First Capital. The pink sheet trades about -0.1 of its potential returns per unit of risk. The First Capital is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,529 in First Capital on October 14, 2024 and sell it today you would lose (329.00) from holding First Capital or give up 9.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Ireland vs. First Capital
Performance |
| Timeline |
| Bank of Ireland |
| First Capital |
Bank of Ireland and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and First Capital
The main advantage of trading using opposite Bank of Ireland and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, First Capital 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 First Capital will offset losses from the drop in First Capital's long position.| Bank of Ireland vs. Alpha Bank SA | Bank of Ireland vs. National Bank of | Bank of Ireland vs. Piraeus Bank SA | Bank of Ireland vs. United Bancorp |
| First Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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