Correlation Between NYSE Composite and KBC Groep
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and KBC Groep NV, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and KBC Groep.
Diversification Opportunities for NYSE Composite and KBC Groep
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and KBC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and KBC Groep go up and down completely randomly.
Pair Corralation between NYSE Composite and KBC Groep
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.49 times less return on investment than KBC Groep. But when comparing it to its historical volatility, NYSE Composite is 2.06 times less risky than KBC Groep. It trades about 0.14 of its potential returns per unit of risk. KBC Groep NV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,662 in KBC Groep NV on August 24, 2024 and sell it today you would earn a total of 1,004 from holding KBC Groep NV or generate 37.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
NYSE Composite vs. KBC Groep NV
Performance |
| Timeline |
NYSE Composite and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
KBC Groep NV
Pair trading matchups for KBC Groep
Pair Trading with NYSE Composite and KBC Groep
The main advantage of trading using opposite NYSE Composite and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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