Correlation Between ATT and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT 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 ATT Inc and Bank of Ireland, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Bank of Ireland.
Diversification Opportunities for ATT and Bank of Ireland
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ATT and Bank is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc 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 ATT 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 ATT Inc 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 ATT i.e., ATT and Bank of Ireland go up and down completely randomly.
Pair Corralation between ATT and Bank of Ireland
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.56 times more return on investment than Bank of Ireland. However, ATT Inc is 1.78 times less risky than Bank of Ireland. It trades about 0.25 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.01 per unit of risk. If you would invest 2,231 in ATT Inc on November 6, 2024 and sell it today you would earn a total of 194.00 from holding ATT Inc or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
ATT Inc vs. Bank of Ireland
Performance |
| Timeline |
| ATT Inc |
| Bank of Ireland |
ATT and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Bank of Ireland
The main advantage of trading using opposite ATT and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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 ATT Inc 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. Alpha Bank SA | Bank of Ireland vs. National Bank of | Bank of Ireland vs. Piraeus Bank SA | Bank of Ireland vs. United Bancorp |
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 Stocks Directory module to find actively traded stocks across global markets.
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