Correlation Between Federal National and KB Financial
Can any of the company-specific risk be diversified away by investing in both Federal National and KB Financial 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 Federal National and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal National Mortgage and KB Financial Group, you can compare the effects of market volatilities on Federal National and KB Financial 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 Federal National with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and KB Financial.
Diversification Opportunities for Federal National and KB Financial
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federal and KB Financial is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Federal National 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 Federal National Mortgage are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Federal National i.e., Federal National and KB Financial go up and down completely randomly.
Pair Corralation between Federal National and KB Financial
Assuming the 90 days horizon Federal National Mortgage is expected to generate 4.19 times more return on investment than KB Financial. However, Federal National is 4.19 times more volatile than KB Financial Group. It trades about 0.11 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.08 per unit of risk. If you would invest 1,200,000 in Federal National Mortgage on September 3, 2024 and sell it today you would earn a total of 2,100,000 from holding Federal National Mortgage or generate 175.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Federal National Mortgage vs. KB Financial Group
Performance |
Timeline |
Federal National Mortgage |
KB Financial Group |
Federal National and KB Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federal National and KB Financial
The main advantage of trading using opposite Federal National and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial's long position.Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |