Correlation Between Volkswagen and Bank of Ireland Group PLC
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen 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 Volkswagen AG VZO and Bank of Ireland, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Bank of Ireland Group PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Bank of Ireland Group PLC.
Diversification Opportunities for Volkswagen and Bank of Ireland Group PLC
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Volkswagen and Bank is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO 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 Volkswagen 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 Volkswagen AG VZO 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 Volkswagen i.e., Volkswagen and Bank of Ireland Group PLC go up and down completely randomly.
Pair Corralation between Volkswagen and Bank of Ireland Group PLC
Assuming the 90 days horizon Volkswagen AG VZO is expected to generate 1.1 times more return on investment than Bank of Ireland Group PLC. However, Volkswagen is 1.1 times more volatile than Bank of Ireland. It trades about 0.28 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.26 per unit of risk. If you would invest 9,240 in Volkswagen AG VZO on October 28, 2024 and sell it today you would earn a total of 1,413 from holding Volkswagen AG VZO or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG VZO vs. Bank of Ireland
Performance |
| Timeline |
| Volkswagen AG VZO |
| Bank of Ireland Group PLC |
Volkswagen and Bank of Ireland Group PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Bank of Ireland Group PLC
The main advantage of trading using opposite Volkswagen and Bank of Ireland Group PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. Volkswagen AG Pref | Volkswagen vs. Mercedes Benz Group AG | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Honda Motor Co |
| Bank of Ireland Group PLC vs. Alpha Bank SA | Bank of Ireland Group PLC vs. National Bank of | Bank of Ireland Group PLC vs. Piraeus Bank SA | Bank of Ireland Group PLC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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