Correlation Between Irish Continental and Glanbia PLC
Can any of the company-specific risk be diversified away by investing in both Irish Continental and Glanbia PLC 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 Irish Continental and Glanbia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Irish Continental Group and Glanbia PLC, you can compare the effects of market volatilities on Irish Continental and Glanbia PLC 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 Irish Continental with a short position of Glanbia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Irish Continental and Glanbia PLC.
Diversification Opportunities for Irish Continental and Glanbia PLC
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Irish and Glanbia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Irish Continental Group and Glanbia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glanbia PLC and Irish Continental 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 Irish Continental Group are associated (or correlated) with Glanbia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glanbia PLC has no effect on the direction of Irish Continental i.e., Irish Continental and Glanbia PLC go up and down completely randomly.
Pair Corralation between Irish Continental and Glanbia PLC
Assuming the 90 days trading horizon Irish Continental Group is expected to generate 0.17 times more return on investment than Glanbia PLC. However, Irish Continental Group is 5.89 times less risky than Glanbia PLC. It trades about -0.1 of its potential returns per unit of risk. Glanbia PLC is currently generating about -0.2 per unit of risk. If you would invest 520.00 in Irish Continental Group on November 29, 2024 and sell it today you would lose (10.00) from holding Irish Continental Group or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Irish Continental Group vs. Glanbia PLC
Performance |
| Timeline |
| Irish Continental |
| Glanbia PLC |
Irish Continental and Glanbia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Irish Continental and Glanbia PLC
The main advantage of trading using opposite Irish Continental and Glanbia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Irish Continental position performs unexpectedly, Glanbia PLC 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 Glanbia PLC will offset losses from the drop in Glanbia PLC's long position.| Irish Continental vs. Dalata Hotel Group | Irish Continental vs. Kingspan Group plc | Irish Continental vs. Glanbia 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 CEOs Directory module to screen CEOs from public companies around the world.
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