Correlation Between Tower Investments and ING Bank
Can any of the company-specific risk be diversified away by investing in both Tower Investments and ING Bank 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 Tower Investments and ING Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Investments SA and ING Bank lski, you can compare the effects of market volatilities on Tower Investments and ING Bank 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 Tower Investments with a short position of ING Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Investments and ING Bank.
Diversification Opportunities for Tower Investments and ING Bank
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tower and ING is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tower Investments SA and ING Bank lski in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Bank lski and Tower Investments 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 Tower Investments SA are associated (or correlated) with ING Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Bank lski has no effect on the direction of Tower Investments i.e., Tower Investments and ING Bank go up and down completely randomly.
Pair Corralation between Tower Investments and ING Bank
Assuming the 90 days trading horizon Tower Investments SA is expected to generate 1.8 times more return on investment than ING Bank. However, Tower Investments is 1.8 times more volatile than ING Bank lski. It trades about -0.04 of its potential returns per unit of risk. ING Bank lski is currently generating about -0.11 per unit of risk. If you would invest 278.00 in Tower Investments SA on September 1, 2024 and sell it today you would lose (12.00) from holding Tower Investments SA or give up 4.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tower Investments SA vs. ING Bank lski
Performance |
| Timeline |
| Tower Investments |
| ING Bank lski |
Tower Investments and ING Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Investments and ING Bank
The main advantage of trading using opposite Tower Investments and ING Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Investments position performs unexpectedly, ING Bank 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 Bank will offset losses from the drop in ING Bank's long position.| Tower Investments vs. Asseco Business Solutions | Tower Investments vs. Detalion Games SA | Tower Investments vs. Asseco South Eastern | Tower Investments vs. CFI Holding SA |
| ING Bank vs. Enter Air SA | ING Bank vs. Varsav Game Studios | ING Bank vs. Globe Trade Centre | ING Bank vs. Igoria Trade SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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