Correlation Between ING Groep and DGB Group
Can any of the company-specific risk be diversified away by investing in both ING Groep and DGB 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 Groep and DGB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Groep NV and DGB Group NV, you can compare the effects of market volatilities on ING Groep and DGB 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 Groep with a short position of DGB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Groep and DGB Group.
Diversification Opportunities for ING Groep and DGB Group
Excellent diversification
The 3 months correlation between ING and DGB is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and DGB Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGB Group NV and ING Groep 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 Groep NV are associated (or correlated) with DGB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGB Group NV has no effect on the direction of ING Groep i.e., ING Groep and DGB Group go up and down completely randomly.
Pair Corralation between ING Groep and DGB Group
Assuming the 90 days trading horizon ING Groep is expected to generate 2.13 times less return on investment than DGB Group. But when comparing it to its historical volatility, ING Groep NV is 3.58 times less risky than DGB Group. It trades about 0.07 of its potential returns per unit of risk. DGB Group NV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 63.00 in DGB Group NV on August 31, 2024 and sell it today you would earn a total of 22.00 from holding DGB Group NV or generate 34.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Groep NV vs. DGB Group NV
Performance |
| Timeline |
| ING Groep NV |
| DGB Group NV |
ING Groep and DGB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Groep and DGB Group
The main advantage of trading using opposite ING Groep and DGB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Groep position performs unexpectedly, DGB 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 DGB Group will offset losses from the drop in DGB Group's long position.| ING Groep vs. Aegon NV | ING Groep vs. ABN Amro Group | ING Groep vs. Koninklijke Philips NV | ING Groep vs. Unilever PLC |
| DGB Group vs. Ease2pay NV | DGB Group vs. Alumexx NV | DGB Group vs. Ctac NV | DGB Group vs. Hydratec Industries NV |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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