Correlation Between KB Financial and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both KB Financial and BBVA Banco 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 BBVA Banco 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 BBVA Banco Frances, you can compare the effects of market volatilities on KB Financial and BBVA Banco 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 BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and BBVA Banco.
Diversification Opportunities for KB Financial and BBVA Banco
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KBIA and BBVA is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances 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 BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of KB Financial i.e., KB Financial and BBVA Banco go up and down completely randomly.
Pair Corralation between KB Financial and BBVA Banco
Assuming the 90 days trading horizon KB Financial is expected to generate 3.64 times less return on investment than BBVA Banco. But when comparing it to its historical volatility, KB Financial Group is 2.04 times less risky than BBVA Banco. It trades about 0.06 of its potential returns per unit of risk. BBVA Banco Frances is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 323.00 in BBVA Banco Frances on November 5, 2024 and sell it today you would earn a total of 1,797 from holding BBVA Banco Frances or generate 556.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. BBVA Banco Frances
Performance |
| Timeline |
| KB Financial Group |
| BBVA Banco Frances |
KB Financial and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and BBVA Banco
The main advantage of trading using opposite KB Financial and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| KB Financial vs. CREO MEDICAL GRP | KB Financial vs. TITANIUM TRANSPORTGROUP | KB Financial vs. Chesapeake Utilities | KB Financial vs. Yuexiu Transport Infrastructure |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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