Correlation Between Bank of Ireland and Tatton Asset

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

Diversification Opportunities for Bank of Ireland and Tatton Asset

0.67

Correlation Coefficient

Bank of Ireland  Tatton Asset

Poor diversification

The 3 months correlation between Bank and Tatton is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Bank of Ireland i.e., Bank of Ireland and Tatton Asset go up and down completely randomly.

Pair Corralation between Bank of Ireland and Tatton Asset

Assuming the 90 days trading horizon Bank of Ireland is expected to generate 1.43 times less return on investment than Tatton Asset. But when comparing it to its historical volatility, Bank of Ireland is 1.04 times less risky than Tatton Asset. It trades about 0.12 of its potential returns per unit of risk. Tatton Asset Management is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  58,175  in Tatton Asset Management on April 23, 2025 and sell it today you would earn a total of  11,825  from holding Tatton Asset Management or generate 20.33% return on investment over 90 days.

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

Bank of Ireland  vs.  Tatton Asset Management

Bank of Ireland

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Ireland are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bank of Ireland unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tatton Asset Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tatton Asset Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tatton Asset exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Ireland and Tatton Asset

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

The idea behind Bank of Ireland and Tatton Asset Management 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.