Correlation Between Bank of Ireland and Malin Plc

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

Diversification Opportunities for Bank of Ireland and Malin Plc

-0.37

Correlation Coefficient

Bank of Ireland  Malin Plc

Very good diversification

The 3 months correlation between Bank and Malin is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Malin plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malin plc 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 Malin Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malin plc has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Malin Plc go up and down completely randomly.

Pair Corralation between Bank of Ireland and Malin Plc

Assuming the 90 days trading horizon Bank of Ireland is expected to under-perform the Malin Plc. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Ireland is 2.51 times less risky than Malin Plc. The stock trades about -0.12 of its potential returns per unit of risk. The Malin plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Malin plc on September 23, 2024 and sell it today you would earn a total of  245.00  from holding Malin plc or generate 39.2% return on investment over 90 days.

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

Bank of Ireland  vs.  Malin plc

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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Malin plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malin plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Malin Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Ireland and Malin Plc

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

The idea behind Bank of Ireland and Malin plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.