Correlation Between Bank of Ireland and Western Alliance
Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Western Alliance 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 Western Alliance 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 Western Alliance Bancorporation, you can compare the effects of market volatilities on Bank of Ireland and Western Alliance 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 Western Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Western Alliance.
Diversification Opportunities for Bank of Ireland and Western Alliance
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Western is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Western Alliance Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alliance Ban 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 Western Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alliance Ban has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Western Alliance go up and down completely randomly.
Pair Corralation between Bank of Ireland and Western Alliance
Assuming the 90 days horizon Bank of Ireland is expected to under-perform the Western Alliance. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank of Ireland is 1.4 times less risky than Western Alliance. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Western Alliance Bancorporation is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 8,843 in Western Alliance Bancorporation on October 14, 2024 and sell it today you would lose (1,003) from holding Western Alliance Bancorporation or give up 11.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Ireland vs. Western Alliance Bancorp.
Performance |
| Timeline |
| Bank of Ireland |
| Western Alliance Ban |
Bank of Ireland and Western Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ireland and Western Alliance
The main advantage of trading using opposite Bank of Ireland and Western Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, Western Alliance 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 Western Alliance will offset losses from the drop in Western Alliance'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 |
| Western Alliance vs. Zions Bancorporation | Western Alliance vs. KeyCorp | Western Alliance vs. First Horizon National | Western Alliance vs. Comerica |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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