Correlation Between Dalata Hotel and AIB Group
Can any of the company-specific risk be diversified away by investing in both Dalata Hotel 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 Dalata Hotel and AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dalata Hotel Group and AIB Group PLC, you can compare the effects of market volatilities on Dalata Hotel 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 Dalata Hotel with a short position of AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalata Hotel and AIB Group.
Diversification Opportunities for Dalata Hotel and AIB Group
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dalata and AIB is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group 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 Dalata Hotel 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 Dalata Hotel Group 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 Dalata Hotel i.e., Dalata Hotel and AIB Group go up and down completely randomly.
Pair Corralation between Dalata Hotel and AIB Group
Assuming the 90 days trading horizon Dalata Hotel is expected to generate 1.56 times less return on investment than AIB Group. But when comparing it to its historical volatility, Dalata Hotel Group is 1.19 times less risky than AIB Group. It trades about 0.03 of its potential returns per unit of risk. AIB Group PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 378.00 in AIB Group PLC on August 28, 2024 and sell it today you would earn a total of 142.00 from holding AIB Group PLC or generate 37.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dalata Hotel Group vs. AIB Group PLC
Performance |
| Timeline |
| Dalata Hotel Group |
| AIB Group PLC |
Dalata Hotel and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dalata Hotel and AIB Group
The main advantage of trading using opposite Dalata Hotel and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel 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.| Dalata Hotel vs. AIB Group PLC | Dalata Hotel vs. Bank of Ireland | Dalata Hotel vs. Kingspan Group plc | Dalata Hotel vs. Irish Residential Properties |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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