Correlation Between Kenmare Resources and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Kenmare Resources 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 Kenmare Resources 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 Kenmare Resources PLC and Bank of Ireland, you can compare the effects of market volatilities on Kenmare Resources 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 Kenmare Resources with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenmare Resources and Bank of Ireland.
Diversification Opportunities for Kenmare Resources and Bank of Ireland
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kenmare and Bank is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kenmare Resources 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 Kenmare Resources 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 Kenmare Resources 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 Kenmare Resources i.e., Kenmare Resources and Bank of Ireland go up and down completely randomly.
Pair Corralation between Kenmare Resources and Bank of Ireland
Assuming the 90 days trading horizon Kenmare Resources PLC is expected to generate 0.92 times more return on investment than Bank of Ireland. However, Kenmare Resources PLC is 1.09 times less risky than Bank of Ireland. It trades about 0.06 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.12 per unit of risk. If you would invest 424.00 in Kenmare Resources PLC on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Kenmare Resources PLC or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kenmare Resources PLC vs. Bank of Ireland
Performance |
| Timeline |
| Kenmare Resources PLC |
| Bank of Ireland |
Kenmare Resources and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenmare Resources and Bank of Ireland
The main advantage of trading using opposite Kenmare Resources and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenmare Resources 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.| Kenmare Resources vs. AIB Group PLC | Kenmare Resources vs. Dalata Hotel Group | Kenmare Resources vs. Uniphar Group PLC | Kenmare Resources vs. Greencoat Renewables 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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