Correlation Between Glanbia PLC and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Glanbia PLC 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 Glanbia PLC 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 Glanbia PLC and Bank of Ireland, you can compare the effects of market volatilities on Glanbia PLC 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 Glanbia PLC with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glanbia PLC and Bank of Ireland.
Diversification Opportunities for Glanbia PLC and Bank of Ireland
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Glanbia and Bank is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia 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 Glanbia PLC 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 Glanbia 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 Glanbia PLC i.e., Glanbia PLC and Bank of Ireland go up and down completely randomly.
Pair Corralation between Glanbia PLC and Bank of Ireland
Assuming the 90 days trading horizon Glanbia PLC is expected to generate 3.39 times less return on investment than Bank of Ireland. But when comparing it to its historical volatility, Glanbia PLC is 1.34 times less risky than Bank of Ireland. It trades about 0.12 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 874.00 in Bank of Ireland on November 8, 2024 and sell it today you would earn a total of 111.00 from holding Bank of Ireland or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glanbia PLC vs. Bank of Ireland
Performance |
| Timeline |
| Glanbia PLC |
| Bank of Ireland |
Glanbia PLC and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glanbia PLC and Bank of Ireland
The main advantage of trading using opposite Glanbia PLC and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glanbia PLC 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.The idea behind Glanbia PLC and Bank of Ireland pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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