Correlation Between Bank of Ireland and Dalata Hotel

Can any of the company-specific risk be diversified away by investing in both Bank of Ireland and Dalata Hotel 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 Bank of Ireland and Dalata Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Ireland and Dalata Hotel Group, you can compare the effects of market volatilities on Bank of Ireland and Dalata Hotel 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 Bank of Ireland with a short position of Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ireland and Dalata Hotel.

Diversification Opportunities for Bank of Ireland and Dalata Hotel

-0.45

Correlation Coefficient

Bank of Ireland  Dalata Hotel

Very good diversification

The 3 months correlation between Bank and Dalata is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group and Bank of Ireland 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 Bank of Ireland are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Dalata Hotel go up and down completely randomly.

Pair Corralation between Bank of Ireland and Dalata Hotel

Assuming the 90 days trading horizon Bank of Ireland is expected to under-perform the Dalata Hotel. In addition to that, Bank of Ireland is 1.24 times more volatile than Dalata Hotel Group. It trades about -0.17 of its total potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.0 per unit of volatility. If you would invest  440.00  in Dalata Hotel Group on August 30, 2024 and sell it today you would lose (2.00) from holding Dalata Hotel Group or give up 0.45% of portfolio value over 90 days.

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

Bank of Ireland  vs.  Dalata Hotel Group

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. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalata Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Dalata Hotel is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank of Ireland and Dalata Hotel

The main advantage of trading using opposite Bank of Ireland and Dalata Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland position performs unexpectedly, Dalata Hotel 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 Dalata Hotel will offset losses from the drop in Dalata Hotel's long position.

The idea behind Bank of Ireland and Dalata Hotel Group 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.