Correlation Between ISEQ 20 and AIB Group
Can any of the company-specific risk be diversified away by investing in both ISEQ 20 and AIB Group 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 ISEQ 20 and AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ISEQ 20 Price and AIB Group PLC, you can compare the effects of market volatilities on ISEQ 20 and AIB Group 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 ISEQ 20 with a short position of AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISEQ 20 and AIB Group.
Diversification Opportunities for ISEQ 20 and AIB Group
Almost no diversification
The 3 months correlation between ISEQ and AIB is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ISEQ 20 Price and AIB Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group PLC and ISEQ 20 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 ISEQ 20 Price are associated (or correlated) with AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group PLC has no effect on the direction of ISEQ 20 i.e., ISEQ 20 and AIB Group go up and down completely randomly.
Pair Corralation between ISEQ 20 and AIB Group
Assuming the 90 days trading horizon ISEQ 20 Price is expected to under-perform the AIB Group. But the index apears to be less risky and, when comparing its historical volatility, ISEQ 20 Price is 1.91 times less risky than AIB Group. The index trades about -0.02 of its potential returns per unit of risk. The AIB Group PLC is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 470.00 in AIB Group PLC on January 28, 2024 and sell it today you would earn a total of 30.00 from holding AIB Group PLC or generate 6.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.0% |
Values | Daily Returns |
ISEQ 20 Price vs. AIB Group PLC
Performance |
Timeline |
ISEQ 20 and AIB Group Volatility Contrast
Predicted Return Density |
Returns |
ISEQ 20 Price
Pair trading matchups for ISEQ 20
AIB Group PLC
Pair trading matchups for AIB Group
Pair Trading with ISEQ 20 and AIB Group
The main advantage of trading using opposite ISEQ 20 and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISEQ 20 position performs unexpectedly, AIB Group 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 AIB Group will offset losses from the drop in AIB Group's long position.ISEQ 20 vs. Dalata Hotel Group | ISEQ 20 vs. Cairn Homes PLC | ISEQ 20 vs. FD Technologies PLC | ISEQ 20 vs. Great Western Mining |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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