Correlation Between Commerzbank and AIB Group
Can any of the company-specific risk be diversified away by investing in both Commerzbank and AIB Group 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 Commerzbank and AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and AIB Group plc, you can compare the effects of market volatilities on Commerzbank and AIB Group 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 Commerzbank with a short position of AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and AIB Group.
Diversification Opportunities for Commerzbank and AIB Group
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commerzbank and AIB is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and AIB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group plc and Commerzbank 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 Commerzbank AG are associated (or correlated) with AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group plc has no effect on the direction of Commerzbank i.e., Commerzbank and AIB Group go up and down completely randomly.
Pair Corralation between Commerzbank and AIB Group
Assuming the 90 days trading horizon Commerzbank is expected to generate 9.23 times less return on investment than AIB Group. In addition to that, Commerzbank is 1.13 times more volatile than AIB Group plc. It trades about 0.0 of its total potential returns per unit of risk. AIB Group plc is currently generating about 0.03 per unit of volatility. If you would invest 510.00 in AIB Group plc on August 26, 2024 and sell it today you would earn a total of 27.00 from holding AIB Group plc or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerzbank AG vs. AIB Group plc
Performance |
| Timeline |
| Commerzbank AG |
| AIB Group plc |
Commerzbank and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and AIB Group
The main advantage of trading using opposite Commerzbank and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, AIB Group 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 AIB Group will offset losses from the drop in AIB Group's long position.| Commerzbank vs. Datang International Power | Commerzbank vs. Vishay Intertechnology | Commerzbank vs. Amkor Technology | Commerzbank vs. Check Point Software |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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