Correlation Between Israel Discount and KBC Groep
Can any of the company-specific risk be diversified away by investing in both Israel Discount and KBC Groep 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 Israel Discount and KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and KBC Groep NV, you can compare the effects of market volatilities on Israel Discount and KBC Groep 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 Israel Discount with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and KBC Groep.
Diversification Opportunities for Israel Discount and KBC Groep
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Israel and KBC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV and Israel Discount 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 Israel Discount Bank are associated (or correlated) with KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Israel Discount i.e., Israel Discount and KBC Groep go up and down completely randomly.
Pair Corralation between Israel Discount and KBC Groep
Assuming the 90 days horizon Israel Discount Bank is expected to generate 3.75 times more return on investment than KBC Groep. However, Israel Discount is 3.75 times more volatile than KBC Groep NV. It trades about 0.04 of its potential returns per unit of risk. KBC Groep NV is currently generating about 0.03 per unit of risk. If you would invest 5,230 in Israel Discount Bank on October 21, 2024 and sell it today you would earn a total of 970.00 from holding Israel Discount Bank or generate 18.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.24% |
| Values | Daily Returns |
Israel Discount Bank vs. KBC Groep NV
Performance |
| Timeline |
| Israel Discount Bank |
| KBC Groep NV |
Israel Discount and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and KBC Groep
The main advantage of trading using opposite Israel Discount and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount position performs unexpectedly, KBC Groep 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 KBC Groep will offset losses from the drop in KBC Groep's long position.| Israel Discount vs. Baraboo Bancorporation | Israel Discount vs. Schweizerische Nationalbank | Israel Discount vs. Danske Bank AS | Israel Discount vs. Absa Group Limited |
| KBC Groep vs. DBS Group Holdings | KBC Groep vs. United Overseas Bank | KBC Groep vs. Overseas Chinese Banking | KBC Groep vs. China Minsh |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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