Correlation Between Bank of Ireland and Gruppo MutuiOnline

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

Diversification Opportunities for Bank of Ireland and Gruppo MutuiOnline

0.17

Correlation Coefficient

Bank of Ireland  Gruppo MutuiOnline

Average diversification

The 3 months correlation between Bank and Gruppo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Gruppo MutuiOnline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo MutuiOnline SpA 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 Gruppo MutuiOnline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo MutuiOnline SpA has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Gruppo MutuiOnline go up and down completely randomly.

Pair Corralation between Bank of Ireland and Gruppo MutuiOnline

Assuming the 90 days trading horizon Bank of Ireland is expected to generate 74.47 times less return on investment than Gruppo MutuiOnline. But when comparing it to its historical volatility, Bank of Ireland is 1.31 times less risky than Gruppo MutuiOnline. It trades about 0.0 of its potential returns per unit of risk. Gruppo MutuiOnline SpA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,335  in Gruppo MutuiOnline SpA on September 17, 2024 and sell it today you would earn a total of  625.00  from holding Gruppo MutuiOnline SpA or generate 18.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.62%
Values	Daily Returns

Bank of Ireland  vs.  Gruppo MutuiOnline SpA

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.

Gruppo MutuiOnline SpA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gruppo MutuiOnline SpA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gruppo MutuiOnline unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Ireland and Gruppo MutuiOnline

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

The idea behind Bank of Ireland and Gruppo MutuiOnline SpA 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.