Correlation Between Metro Bank and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both Metro Bank 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 Metro Bank 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 Metro Bank PLC and Bank of Ireland, you can compare the effects of market volatilities on Metro Bank 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 Metro Bank with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Bank and Bank of Ireland.
Diversification Opportunities for Metro Bank and Bank of Ireland
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metro and Bank is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Metro Bank 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 Metro Bank 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 Metro Bank 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 Metro Bank i.e., Metro Bank and Bank of Ireland go up and down completely randomly.
Pair Corralation between Metro Bank and Bank of Ireland
Assuming the 90 days trading horizon Metro Bank is expected to generate 1.35 times less return on investment than Bank of Ireland. In addition to that, Metro Bank is 1.66 times more volatile than Bank of Ireland. It trades about 0.17 of its total potential returns per unit of risk. Bank of Ireland is currently generating about 0.38 per unit of volatility. If you would invest 866.00 in Bank of Ireland on November 8, 2024 and sell it today you would earn a total of 115.00 from holding Bank of Ireland or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Bank PLC vs. Bank of Ireland
Performance |
| Timeline |
| Metro Bank PLC |
| Bank of Ireland |
Metro Bank and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Bank and Bank of Ireland
The main advantage of trading using opposite Metro Bank and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Bank 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.| Metro Bank vs. UNIQA Insurance Group | Metro Bank vs. STMicroelectronics NV | Metro Bank vs. EVS Broadcast Equipment | Metro Bank vs. Sydbank |
| Bank of Ireland vs. Amedeo Air Four | Bank of Ireland vs. Systemair AB | Bank of Ireland vs. Central Asia Metals | Bank of Ireland vs. Fair Oaks Income |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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