Correlation Between ING Groep and Koninklijke Philips
Can any of the company-specific risk be diversified away by investing in both ING Groep and Koninklijke Philips 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 Koninklijke Philips 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 Koninklijke Philips NV, you can compare the effects of market volatilities on ING Groep and Koninklijke Philips 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 Koninklijke Philips. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Groep and Koninklijke Philips.
Diversification Opportunities for ING Groep and Koninklijke Philips
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ING and Koninklijke is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips 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 Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of ING Groep i.e., ING Groep and Koninklijke Philips go up and down completely randomly.
Pair Corralation between ING Groep and Koninklijke Philips
Assuming the 90 days trading horizon ING Groep NV is expected to generate 0.28 times more return on investment than Koninklijke Philips. However, ING Groep NV is 3.55 times less risky than Koninklijke Philips. It trades about -0.2 of its potential returns per unit of risk. Koninklijke Philips NV is currently generating about -0.17 per unit of risk. If you would invest 1,559 in ING Groep NV on August 24, 2024 and sell it today you would lose (77.00) from holding ING Groep NV or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Groep NV vs. Koninklijke Philips NV
Performance |
| Timeline |
| ING Groep NV |
| Koninklijke Philips |
ING Groep and Koninklijke Philips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Groep and Koninklijke Philips
The main advantage of trading using opposite ING Groep and Koninklijke Philips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Groep position performs unexpectedly, Koninklijke Philips 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 Koninklijke Philips will offset losses from the drop in Koninklijke Philips' long position.| ING Groep vs. Aegon NV | ING Groep vs. ABN Amro Group | ING Groep vs. Koninklijke Philips NV | ING Groep vs. Unilever PLC |
| Koninklijke Philips vs. Unilever PLC | Koninklijke Philips vs. ING Groep NV | Koninklijke Philips vs. Aegon NV | Koninklijke Philips vs. Koninklijke Ahold Delhaize |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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