Correlation Between Greencoat Renewables and Bank of Ireland

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

Diversification Opportunities for Greencoat Renewables and Bank of Ireland

0.68

Correlation Coefficient

Greencoat Renewables  Bank of Ireland

Poor diversification

The 3 months correlation between Greencoat and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Greencoat Renewables PLC 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 Greencoat Renewables 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 Greencoat Renewables PLC 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 Greencoat Renewables i.e., Greencoat Renewables and Bank of Ireland go up and down completely randomly.

Pair Corralation between Greencoat Renewables and Bank of Ireland

Assuming the 90 days trading horizon Greencoat Renewables PLC is expected to generate 0.61 times more return on investment than Bank of Ireland. However, Greencoat Renewables PLC is 1.65 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 -0.09 per unit of risk. If you would invest  95.00  in Greencoat Renewables PLC on September 17, 2024 and sell it today you would lose (11.00) from holding Greencoat Renewables PLC or give up 11.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Greencoat Renewables PLC  vs.  Bank of Ireland

Greencoat Renewables PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greencoat Renewables PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Greencoat Renewables and Bank of Ireland

The main advantage of trading using opposite Greencoat Renewables and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greencoat Renewables 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 Greencoat Renewables PLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..