Correlation Between East West and ING Group
Can any of the company-specific risk be diversified away by investing in both East West 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 East West and ING Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Bancorp and ING Group NV, you can compare the effects of market volatilities on East West 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 East West with a short position of ING Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and ING Group.
Diversification Opportunities for East West and ING Group
Pay attention - limited upside
The 3 months correlation between East and ING is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding East West Bancorp 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 East West 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 East West Bancorp 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 East West i.e., East West and ING Group go up and down completely randomly.
Pair Corralation between East West and ING Group
Given the investment horizon of 90 days East West Bancorp is expected to generate 1.49 times more return on investment than ING Group. However, East West is 1.49 times more volatile than ING Group NV. It trades about 0.05 of its potential returns per unit of risk. ING Group NV is currently generating about 0.06 per unit of risk. If you would invest 6,485 in East West Bancorp on August 23, 2024 and sell it today you would earn a total of 4,065 from holding East West Bancorp or generate 62.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
East West Bancorp vs. ING Group NV
Performance |
| Timeline |
| East West Bancorp |
| ING Group NV |
East West and ING Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and ING Group
The main advantage of trading using opposite East West and ING Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West 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.| East West vs. Barclays PLC ADR | East West vs. UBS Group AG | East West vs. ING Group NV | East West vs. Citigroup |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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