Correlation Between Disney and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Disney 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 Disney 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 Walt Disney and Bank of Ireland, you can compare the effects of market volatilities on Disney 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 Disney with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Bank of Ireland.
Diversification Opportunities for Disney and Bank of Ireland
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Disney and Bank is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney 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 Disney 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 Walt Disney 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 Disney i.e., Disney and Bank of Ireland go up and down completely randomly.
Pair Corralation between Disney and Bank of Ireland
Considering the 90-day investment horizon Walt Disney is expected to under-perform the Bank of Ireland. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 2.8 times less risky than Bank of Ireland. The stock trades about -0.27 of its potential returns per unit of risk. The Bank of Ireland is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 921.00 in Bank of Ireland on October 14, 2024 and sell it today you would lose (19.00) from holding Bank of Ireland or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Bank of Ireland
Performance |
| Timeline |
| Walt Disney |
| Bank of Ireland |
Disney and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Bank of Ireland
The main advantage of trading using opposite Disney and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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.| Disney vs. Liberty Media | Disney vs. Atlanta Braves Holdings, | Disney vs. News Corp B | Disney vs. News Corp A |
| 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 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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