Correlation Between ING Group and Bank of NT
Can any of the company-specific risk be diversified away by investing in both ING Group and Bank of NT 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 Bank of NT 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 Bank of NT, you can compare the effects of market volatilities on ING Group and Bank of NT 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 Bank of NT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Group and Bank of NT.
Diversification Opportunities for ING Group and Bank of NT
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ING and Bank is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ING Group NV and Bank of NT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of NT 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 Bank of NT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of NT has no effect on the direction of ING Group i.e., ING Group and Bank of NT go up and down completely randomly.
Pair Corralation between ING Group and Bank of NT
Considering the 90-day investment horizon ING Group NV is expected to under-perform the Bank of NT. But the stock apears to be less risky and, when comparing its historical volatility, ING Group NV is 1.19 times less risky than Bank of NT. The stock trades about -0.17 of its potential returns per unit of risk. The Bank of NT is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,753 in Bank of NT on August 26, 2024 and sell it today you would earn a total of 92.00 from holding Bank of NT or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Group NV vs. Bank of NT
Performance |
| Timeline |
| ING Group NV |
| Bank of NT |
ING Group and Bank of NT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Group and Bank of NT
The main advantage of trading using opposite ING Group and Bank of NT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Group position performs unexpectedly, Bank of NT 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 Bank of NT will offset losses from the drop in Bank of NT'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 |
| Bank of NT vs. PJT Partners | Bank of NT vs. National Bank Holdings | Bank of NT vs. FB Financial Corp | Bank of NT vs. Northrim BanCorp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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