Correlation Between Donegal Investment and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Donegal Investment 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 Donegal Investment 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 Donegal Investment Group and Bank of Ireland, you can compare the effects of market volatilities on Donegal Investment 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 Donegal Investment with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Donegal Investment and Bank of Ireland.
Diversification Opportunities for Donegal Investment and Bank of Ireland
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Donegal and Bank is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Investment Group 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 Donegal Investment 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 Donegal Investment Group 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 Donegal Investment i.e., Donegal Investment and Bank of Ireland go up and down completely randomly.
Pair Corralation between Donegal Investment and Bank of Ireland
Assuming the 90 days trading horizon Donegal Investment Group is expected to generate 114.46 times more return on investment than Bank of Ireland. However, Donegal Investment is 114.46 times more volatile than Bank of Ireland. It trades about 0.19 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.27 per unit of risk. If you would invest 1,650 in Donegal Investment Group on November 10, 2024 and sell it today you would earn a total of 0.00 from holding Donegal Investment Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Donegal Investment Group vs. Bank of Ireland
Performance |
| Timeline |
| Donegal Investment |
| Bank of Ireland |
Donegal Investment and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Donegal Investment and Bank of Ireland
The main advantage of trading using opposite Donegal Investment and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Investment 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.| Donegal Investment vs. Great Western Mining | Donegal Investment vs. Dalata Hotel Group | Donegal Investment vs. FD Technologies PLC |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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