Correlation Between FD Technologies and AIB Group
Can any of the company-specific risk be diversified away by investing in both FD Technologies 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 FD Technologies and AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FD Technologies PLC and AIB Group PLC, you can compare the effects of market volatilities on FD Technologies 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 FD Technologies with a short position of AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FD Technologies and AIB Group.
Diversification Opportunities for FD Technologies and AIB Group
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between GYQ and AIB is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding FD Technologies PLC 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 FD Technologies 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 FD Technologies PLC 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 FD Technologies i.e., FD Technologies and AIB Group go up and down completely randomly.
Pair Corralation between FD Technologies and AIB Group
Assuming the 90 days trading horizon FD Technologies PLC is expected to under-perform the AIB Group. In addition to that, FD Technologies is 1.52 times more volatile than AIB Group PLC. It trades about -0.03 of its total potential returns per unit of risk. AIB Group PLC is currently generating about 0.08 per unit of volatility. If you would invest 385.00 in AIB Group PLC on January 19, 2024 and sell it today you would earn a total of 120.00 from holding AIB Group PLC or generate 31.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FD Technologies PLC vs. AIB Group PLC
Performance |
| Timeline |
| FD Technologies PLC |
| AIB Group PLC |
FD Technologies and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FD Technologies and AIB Group
The main advantage of trading using opposite FD Technologies and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FD Technologies 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.| FD Technologies vs. Datalex | FD Technologies vs. Great Western Mining | FD Technologies vs. Donegal Investment Group | FD Technologies vs. Ryanair Holdings plc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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