Correlation Between Cairn Homes and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Bank of Ireland 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 Cairn Homes and Bank of Ireland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Bank of Ireland, you can compare the effects of market volatilities on Cairn Homes and Bank of Ireland 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 Cairn Homes with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Bank of Ireland.
Diversification Opportunities for Cairn Homes and Bank of Ireland
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cairn and Bank is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Cairn Homes i.e., Cairn Homes and Bank of Ireland go up and down completely randomly.
Pair Corralation between Cairn Homes and Bank of Ireland
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.89 times more return on investment than Bank of Ireland. However, Cairn Homes PLC is 1.13 times less risky than Bank of Ireland. It trades about -0.11 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.12 per unit of risk. If you would invest 215.00 in Cairn Homes PLC on September 3, 2024 and sell it today you would lose (9.00) from holding Cairn Homes PLC or give up 4.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Bank of Ireland
Performance |
| Timeline |
| Cairn Homes PLC |
| Bank of Ireland |
Cairn Homes and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Bank of Ireland
The main advantage of trading using opposite Cairn Homes and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Bank of Ireland 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 Bank of Ireland will offset losses from the drop in Bank of Ireland's long position.| Cairn Homes vs. Glenveagh Properties PLC | Cairn Homes vs. AIB Group PLC | Cairn Homes vs. Dalata Hotel Group | Cairn Homes vs. Bank of Ireland |
| Bank of Ireland vs. AIB Group PLC | Bank of Ireland vs. Kingspan Group plc | Bank of Ireland vs. Glanbia PLC | Bank of Ireland vs. Ryanair Holdings plc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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