Correlation Between Territorial Bancorp and Bank of Ireland Group PLC
Can any of the company-specific risk be diversified away by investing in both Territorial Bancorp and Bank of Ireland Group 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 Territorial Bancorp and Bank of Ireland Group PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Territorial Bancorp and Bank of Ireland, you can compare the effects of market volatilities on Territorial Bancorp and Bank of Ireland Group 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 Territorial Bancorp with a short position of Bank of Ireland Group PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Territorial Bancorp and Bank of Ireland Group PLC.
Diversification Opportunities for Territorial Bancorp and Bank of Ireland Group PLC
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Territorial and Bank is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland Group PLC and Territorial Bancorp 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 Territorial Bancorp are associated (or correlated) with Bank of Ireland Group PLC. 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 Group PLC has no effect on the direction of Territorial Bancorp i.e., Territorial Bancorp and Bank of Ireland Group PLC go up and down completely randomly.
Pair Corralation between Territorial Bancorp and Bank of Ireland Group PLC
Given the investment horizon of 90 days Territorial Bancorp is expected to under-perform the Bank of Ireland Group PLC. But the stock apears to be less risky and, when comparing its historical volatility, Territorial Bancorp is 1.47 times less risky than Bank of Ireland Group PLC. The stock trades about -0.18 of its potential returns per unit of risk. The Bank of Ireland is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 900.00 in Bank of Ireland on October 28, 2024 and sell it today you would earn a total of 115.00 from holding Bank of Ireland or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Territorial Bancorp vs. Bank of Ireland
Performance |
| Timeline |
| Territorial Bancorp |
| Bank of Ireland Group PLC |
Territorial Bancorp and Bank of Ireland Group PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Territorial Bancorp and Bank of Ireland Group PLC
The main advantage of trading using opposite Territorial Bancorp and Bank of Ireland Group PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Territorial Bancorp position performs unexpectedly, Bank of Ireland Group 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 Bank of Ireland Group PLC will offset losses from the drop in Bank of Ireland Group PLC's long position.| Territorial Bancorp vs. First Hawaiian | Territorial Bancorp vs. Bank of Hawaii | Territorial Bancorp vs. Financial Institutions | Territorial Bancorp vs. Heritage Financial |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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