Correlation Between Gamma Communications and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications 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 Gamma Communications PLC and Bank of Ireland, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Bank of Ireland.
Diversification Opportunities for Gamma Communications and Bank of Ireland
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gamma and Bank is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications 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 Gamma Communications 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 Gamma Communications 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 Gamma Communications i.e., Gamma Communications and Bank of Ireland go up and down completely randomly.
Pair Corralation between Gamma Communications and Bank of Ireland
Assuming the 90 days trading horizon Gamma Communications PLC is expected to generate 0.62 times more return on investment than Bank of Ireland. However, Gamma Communications PLC is 1.61 times less risky than Bank of Ireland. It trades about 0.03 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.02 per unit of risk. If you would invest 116,997 in Gamma Communications PLC on October 15, 2024 and sell it today you would earn a total of 25,803 from holding Gamma Communications PLC or generate 22.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications PLC vs. Bank of Ireland
Performance |
| Timeline |
| Gamma Communications PLC |
| Bank of Ireland |
Gamma Communications and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Bank of Ireland
The main advantage of trading using opposite Gamma Communications and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.| Gamma Communications vs. Trainline Plc | Gamma Communications vs. United Utilities Group | Gamma Communications vs. Ecofin Global Utilities | Gamma Communications vs. UNIQA Insurance Group |
| Bank of Ireland vs. Sparebanken Vest | Bank of Ireland vs. Dairy Farm International | Bank of Ireland vs. TBC Bank Group | Bank of Ireland vs. Nordea Bank Abp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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