Correlation Between Banco Bilbao and ING Group
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and ING 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 Banco Bilbao and ING Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bilbao Viscaya and ING Group NV, you can compare the effects of market volatilities on Banco Bilbao and ING 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 Banco Bilbao with a short position of ING Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and ING Group.
Diversification Opportunities for Banco Bilbao and ING Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and ING is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and ING Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Group NV and Banco Bilbao 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 Banco Bilbao Viscaya are associated (or correlated) with ING Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Group NV has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and ING Group go up and down completely randomly.
Pair Corralation between Banco Bilbao and ING Group
Given the investment horizon of 90 days Banco Bilbao Viscaya is expected to generate 1.33 times more return on investment than ING Group. However, Banco Bilbao is 1.33 times more volatile than ING Group NV. It trades about -0.02 of its potential returns per unit of risk. ING Group NV is currently generating about -0.05 per unit of risk. If you would invest 1,050 in Banco Bilbao Viscaya on August 24, 2024 and sell it today you would lose (81.00) from holding Banco Bilbao Viscaya or give up 7.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bilbao Viscaya vs. ING Group NV
Performance |
| Timeline |
| Banco Bilbao Viscaya |
| ING Group NV |
Banco Bilbao and ING Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bilbao and ING Group
The main advantage of trading using opposite Banco Bilbao and ING Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, ING 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 ING Group will offset losses from the drop in ING Group's long position.| Banco Bilbao vs. Barclays PLC ADR | Banco Bilbao vs. ING Group NV | Banco Bilbao vs. Banco Santander SA | Banco Bilbao vs. HSBC Holdings PLC |
| ING Group vs. Natwest Group PLC | ING Group vs. HSBC Holdings PLC | ING Group vs. Banco Santander SA | ING Group vs. UBS Group AG |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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