Correlation Between ING Groep and Bank of China
Can any of the company-specific risk be diversified away by investing in both ING Groep and Bank of China 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 Bank of China 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 Bank of China, you can compare the effects of market volatilities on ING Groep and Bank of China 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 Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Groep and Bank of China.
Diversification Opportunities for ING Groep and Bank of China
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ING and Bank is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China 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 Bank of China. 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 China has no effect on the direction of ING Groep i.e., ING Groep and Bank of China go up and down completely randomly.
Pair Corralation between ING Groep and Bank of China
Assuming the 90 days horizon ING Groep is expected to generate 2.71 times less return on investment than Bank of China. But when comparing it to its historical volatility, ING Groep NV is 2.33 times less risky than Bank of China. It trades about 0.04 of its potential returns per unit of risk. Bank of China is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Bank of China on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Bank of China or generate 36.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 82.19% |
| Values | Daily Returns |
ING Groep NV vs. Bank of China
Performance |
| Timeline |
| ING Groep NV |
| Bank of China |
ING Groep and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Groep and Bank of China
The main advantage of trading using opposite ING Groep and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Groep position performs unexpectedly, Bank of China 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 China will offset losses from the drop in Bank of China's long position.| ING Groep vs. Bank of America | ING Groep vs. Citigroup | ING Groep vs. Wells Fargo | ING Groep vs. Toronto Dominion Bank |
| Bank of China vs. Banco Bilbao Vizcaya | Bank of China vs. ABN AMRO Bank | Bank of China vs. ING Groep NV | Bank of China vs. Banco de Sabadell |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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