Correlation Between ING Groep and Bank of America
Can any of the company-specific risk be diversified away by investing in both ING Groep and Bank of America 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 America 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 America, you can compare the effects of market volatilities on ING Groep and Bank of America 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 America. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Groep and Bank of America.
Diversification Opportunities for ING Groep and Bank of America
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ING and Bank is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 America. 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 America has no effect on the direction of ING Groep i.e., ING Groep and Bank of America go up and down completely randomly.
Pair Corralation between ING Groep and Bank of America
Assuming the 90 days trading horizon ING Groep NV is expected to under-perform the Bank of America. But the stock apears to be less risky and, when comparing its historical volatility, ING Groep NV is 1.69 times less risky than Bank of America. The stock trades about -0.23 of its potential returns per unit of risk. The Bank of America is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3,877 in Bank of America on September 1, 2024 and sell it today you would earn a total of 657.00 from holding Bank of America or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Groep NV vs. Bank of America
Performance |
| Timeline |
| ING Groep NV |
| Bank of America |
ING Groep and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Groep and Bank of America
The main advantage of trading using opposite ING Groep and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Groep position performs unexpectedly, Bank of America 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 America will offset losses from the drop in Bank of America's long position.| ING Groep vs. JPMorgan Chase Co | ING Groep vs. Bank of America | ING Groep vs. Wells Fargo | ING Groep vs. HSBC Holdings plc |
| Bank of America vs. PRECISION DRILLING P | Bank of America vs. Insurance Australia Group | Bank of America vs. United Insurance Holdings | Bank of America vs. SBI Insurance Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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