Correlation Between ING Bank and Pepco Group
Can any of the company-specific risk be diversified away by investing in both ING Bank and Pepco 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 ING Bank and Pepco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Bank lski and Pepco Group BV, you can compare the effects of market volatilities on ING Bank and Pepco 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 ING Bank with a short position of Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Bank and Pepco Group.
Diversification Opportunities for ING Bank and Pepco Group
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ING and Pepco is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski and Pepco Group BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepco Group BV and ING Bank 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 ING Bank lski are associated (or correlated) with Pepco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepco Group BV has no effect on the direction of ING Bank i.e., ING Bank and Pepco Group go up and down completely randomly.
Pair Corralation between ING Bank and Pepco Group
Assuming the 90 days trading horizon ING Bank lski is expected to generate 0.58 times more return on investment than Pepco Group. However, ING Bank lski is 1.73 times less risky than Pepco Group. It trades about 0.54 of its potential returns per unit of risk. Pepco Group BV is currently generating about -0.15 per unit of risk. If you would invest 24,250 in ING Bank lski on October 25, 2024 and sell it today you would earn a total of 3,500 from holding ING Bank lski or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Bank lski vs. Pepco Group BV
Performance |
| Timeline |
| ING Bank lski |
| Pepco Group BV |
ING Bank and Pepco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Bank and Pepco Group
The main advantage of trading using opposite ING Bank and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Bank position performs unexpectedly, Pepco 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 Pepco Group will offset losses from the drop in Pepco Group's long position.| ING Bank vs. GreenX Metals | ING Bank vs. PMPG Polskie Media | ING Bank vs. LSI Software SA | ING Bank vs. SOFTWARE MANSION SPOLKA |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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