Correlation Between KB Financial and Capitol Federal
Can any of the company-specific risk be diversified away by investing in both KB Financial and Capitol Federal 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 KB Financial and Capitol Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Financial Group and Capitol Federal Financial, you can compare the effects of market volatilities on KB Financial and Capitol Federal 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 KB Financial with a short position of Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Capitol Federal.
Diversification Opportunities for KB Financial and Capitol Federal
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KB Financial and Capitol is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and KB Financial 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 KB Financial Group are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of KB Financial i.e., KB Financial and Capitol Federal go up and down completely randomly.
Pair Corralation between KB Financial and Capitol Federal
Allowing for the 90-day total investment horizon KB Financial is expected to generate 1.55 times less return on investment than Capitol Federal. In addition to that, KB Financial is 1.08 times more volatile than Capitol Federal Financial. It trades about 0.06 of its total potential returns per unit of risk. Capitol Federal Financial is currently generating about 0.11 per unit of volatility. If you would invest 583.00 in Capitol Federal Financial on September 2, 2024 and sell it today you would earn a total of 85.00 from holding Capitol Federal Financial or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Capitol Federal Financial
Performance |
| Timeline |
| KB Financial Group |
| Capitol Federal Financial |
KB Financial and Capitol Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Capitol Federal
The main advantage of trading using opposite KB Financial and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.| KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First Bancorp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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