Correlation Between Sydbank and Bank of Ireland

Can any of the company-specific risk be diversified away by investing in both Sydbank 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 Sydbank 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 Sydbank and Bank of Ireland, you can compare the effects of market volatilities on Sydbank 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 Sydbank with a short position of Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank and Bank of Ireland.

Diversification Opportunities for Sydbank and Bank of Ireland

-0.45

Correlation Coefficient

Sydbank  Bank of Ireland

Very good diversification

The 3 months correlation between Sydbank and Bank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank 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 Sydbank 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 Sydbank 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 Sydbank i.e., Sydbank and Bank of Ireland go up and down completely randomly.

Pair Corralation between Sydbank and Bank of Ireland

Assuming the 90 days trading horizon Sydbank is expected to generate 0.53 times more return on investment than Bank of Ireland. However, Sydbank is 1.9 times less risky than Bank of Ireland. It trades about 0.15 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.04 per unit of risk. If you would invest  32,910  in Sydbank on September 12, 2024 and sell it today you would earn a total of  4,320  from holding Sydbank or generate 13.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sydbank  vs.  Bank of Ireland

Sydbank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sydbank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bank of Ireland is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sydbank and Bank of Ireland

The main advantage of trading using opposite Sydbank and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sydbank 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 Sydbank 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.