Correlation Between Bank of Ireland and United Bankshares
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and United Bankshares 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 United Bankshares 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 United Bankshares, you can compare the effects of market volatilities on Bank of Ireland and United Bankshares 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 United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and United Bankshares.
Diversification Opportunities for Bank of Ireland and United Bankshares
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and United is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankshares 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 United Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bankshares has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and United Bankshares go up and down completely randomly.
Pair Corralation between Bank of Ireland and United Bankshares
Assuming the 90 days horizon Bank of Ireland is expected to under-perform the United Bankshares. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank of Ireland is 1.09 times less risky than United Bankshares. The pink sheet trades about -0.1 of its potential returns per unit of risk. The United Bankshares is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,714 in United Bankshares on October 14, 2024 and sell it today you would lose (140.00) from holding United Bankshares or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Ireland vs. United Bankshares
Performance |
| Timeline |
| Bank of Ireland |
| United Bankshares |
Bank of Ireland and United Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and United Bankshares
The main advantage of trading using opposite Bank of Ireland and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, United Bankshares 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 United Bankshares will offset losses from the drop in United Bankshares' 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 |
| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier Bancorp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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