Correlation Between Solvay SA and ING Groep
Can any of the company-specific risk be diversified away by investing in both Solvay SA and ING 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 Solvay SA and ING Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay SA and ING Groep NV, you can compare the effects of market volatilities on Solvay SA and ING 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 Solvay SA with a short position of ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and ING Groep.
Diversification Opportunities for Solvay SA and ING Groep
Pay attention - limited upside
The 3 months correlation between Solvay and ING is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV and Solvay SA 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 Solvay SA are associated (or correlated) with ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Solvay SA i.e., Solvay SA and ING Groep go up and down completely randomly.
Pair Corralation between Solvay SA and ING Groep
Assuming the 90 days trading horizon Solvay SA is expected to generate 3.45 times more return on investment than ING Groep. However, Solvay SA is 3.45 times more volatile than ING Groep NV. It trades about 0.09 of its potential returns per unit of risk. ING Groep NV is currently generating about 0.09 per unit of risk. If you would invest 1,409 in Solvay SA on August 30, 2024 and sell it today you would earn a total of 1,821 from holding Solvay SA or generate 129.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.02% |
| Values | Daily Returns |
Solvay SA vs. ING Groep NV
Performance |
| Timeline |
| Solvay SA |
| ING Groep NV |
Solvay SA and ING Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and ING Groep
The main advantage of trading using opposite Solvay SA and ING Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA position performs unexpectedly, ING 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 ING Groep will offset losses from the drop in ING Groep's long position.| Solvay SA vs. Melexis NV | Solvay SA vs. Biotalys NV | Solvay SA vs. Nextensa NV | Solvay SA vs. Belysse Group NV |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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