Correlation Between TBC Bank and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both TBC 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 TBC 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 TBC Bank Group and Bank of Ireland, you can compare the effects of market volatilities on TBC 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 TBC Bank with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBC Bank and Bank of Ireland.
Diversification Opportunities for TBC Bank and Bank of Ireland
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TBC and Bank is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding TBC Bank Group 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 TBC 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 TBC Bank Group 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 TBC Bank i.e., TBC Bank and Bank of Ireland go up and down completely randomly.
Pair Corralation between TBC Bank and Bank of Ireland
Assuming the 90 days trading horizon TBC Bank is expected to generate 1.31 times less return on investment than Bank of Ireland. But when comparing it to its historical volatility, TBC Bank Group is 1.08 times less risky than Bank of Ireland. It trades about 0.03 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 742.00 in Bank of Ireland on October 16, 2024 and sell it today you would earn a total of 144.00 from holding Bank of Ireland or generate 19.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TBC Bank Group vs. Bank of Ireland
Performance |
| Timeline |
| TBC Bank Group |
| Bank of Ireland |
TBC Bank and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TBC Bank and Bank of Ireland
The main advantage of trading using opposite TBC Bank and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TBC 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.| TBC Bank vs. Sparebank 1 SR | TBC Bank vs. Playtech Plc | TBC Bank vs. SoftBank Group Corp | TBC Bank vs. Hochschild Mining plc |
| Bank of Ireland vs. Sparebanken Vest | Bank of Ireland vs. Dairy Farm International | Bank of Ireland vs. TBC Bank Group | Bank of Ireland vs. Nordea Bank Abp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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