Correlation Between KB Financial and Federal National
Can any of the company-specific risk be diversified away by investing in both KB Financial and Federal National 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 Federal National 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 Federal National Mortgage, you can compare the effects of market volatilities on KB Financial and Federal National 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 Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Federal National.
Diversification Opportunities for KB Financial and Federal National
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KB Financial and Federal is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage 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 Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of KB Financial i.e., KB Financial and Federal National go up and down completely randomly.
Pair Corralation between KB Financial and Federal National
Allowing for the 90-day total investment horizon KB Financial is expected to generate 10.05 times less return on investment than Federal National. But when comparing it to its historical volatility, KB Financial Group is 7.39 times less risky than Federal National. It trades about 0.14 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,250,000 in Federal National Mortgage on September 3, 2024 and sell it today you would earn a total of 2,050,000 from holding Federal National Mortgage or generate 164.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Federal National Mortgage
Performance |
| Timeline |
| KB Financial Group |
| Federal National Mortgage |
KB Financial and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Federal National
The main advantage of trading using opposite KB Financial and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National'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 |
| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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