Correlation Between ING Group and Banco Bilbao
Can any of the company-specific risk be diversified away by investing in both ING Group and Banco Bilbao 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 Group and Banco Bilbao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Group NV and Banco Bilbao Viscaya, you can compare the effects of market volatilities on ING Group and Banco Bilbao 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 Group with a short position of Banco Bilbao. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Group and Banco Bilbao.
Diversification Opportunities for ING Group and Banco Bilbao
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ING and Banco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ING Group NV and Banco Bilbao Viscaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bilbao Viscaya and ING Group 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 Group NV are associated (or correlated) with Banco Bilbao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bilbao Viscaya has no effect on the direction of ING Group i.e., ING Group and Banco Bilbao go up and down completely randomly.
Pair Corralation between ING Group and Banco Bilbao
Considering the 90-day investment horizon ING Group NV is expected to generate 0.75 times more return on investment than Banco Bilbao. However, ING Group NV is 1.33 times less risky than Banco Bilbao. It trades about 0.05 of its potential returns per unit of risk. Banco Bilbao Viscaya is currently generating about 0.03 per unit of risk. If you would invest 1,314 in ING Group NV on August 27, 2024 and sell it today you would earn a total of 214.00 from holding ING Group NV or generate 16.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Group NV vs. Banco Bilbao Viscaya
Performance |
| Timeline |
| ING Group NV |
| Banco Bilbao Viscaya |
ING Group and Banco Bilbao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Group and Banco Bilbao
The main advantage of trading using opposite ING Group and Banco Bilbao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Group position performs unexpectedly, Banco Bilbao 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 Banco Bilbao will offset losses from the drop in Banco Bilbao's long position.| ING Group vs. Natwest Group PLC | ING Group vs. HSBC Holdings PLC | ING Group vs. Banco Santander SA | ING Group vs. UBS Group AG |
| Banco Bilbao vs. Barclays PLC ADR | Banco Bilbao vs. ING Group NV | Banco Bilbao vs. Banco Santander SA | Banco Bilbao vs. HSBC Holdings PLC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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