Correlation Between HomeStreet and KBC Groep
Can any of the company-specific risk be diversified away by investing in both HomeStreet and KBC Groep 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 HomeStreet and KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeStreet and KBC Groep NV, you can compare the effects of market volatilities on HomeStreet and KBC Groep 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 HomeStreet with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeStreet and KBC Groep.
Diversification Opportunities for HomeStreet and KBC Groep
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HomeStreet and KBC is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HomeStreet and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV and HomeStreet 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 HomeStreet are associated (or correlated) with KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of HomeStreet i.e., HomeStreet and KBC Groep go up and down completely randomly.
Pair Corralation between HomeStreet and KBC Groep
Given the investment horizon of 90 days HomeStreet is expected to generate 3.37 times more return on investment than KBC Groep. However, HomeStreet is 3.37 times more volatile than KBC Groep NV. It trades about 0.06 of its potential returns per unit of risk. KBC Groep NV is currently generating about 0.04 per unit of risk. If you would invest 672.00 in HomeStreet on August 31, 2024 and sell it today you would earn a total of 516.00 from holding HomeStreet or generate 76.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeStreet vs. KBC Groep NV
Performance |
| Timeline |
| HomeStreet |
| KBC Groep NV |
HomeStreet and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeStreet and KBC Groep
The main advantage of trading using opposite HomeStreet and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeStreet position performs unexpectedly, KBC Groep 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 KBC Groep will offset losses from the drop in KBC Groep's long position.| HomeStreet vs. Heartland Financial USA | HomeStreet vs. Heritage Commerce Corp | HomeStreet vs. Business First Bancshares | HomeStreet vs. German American Bancorp |
| KBC Groep vs. Bank Mandiri Persero | KBC Groep vs. Piraeus Bank SA | KBC Groep vs. Eurobank Ergasias Services | KBC Groep vs. Kasikornbank Public Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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