Correlation Between Adyen NV and ING Groep

Can any of the company-specific risk be diversified away by investing in both Adyen NV 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 Adyen NV and ING Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adyen NV and ING Groep NV, you can compare the effects of market volatilities on Adyen NV 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 Adyen NV with a short position of ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adyen NV and ING Groep.

Diversification Opportunities for Adyen NV and ING Groep

0.08

Correlation Coefficient

Adyen NV  ING Groep

Significant diversification

The 3 months correlation between Adyen and ING is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Adyen NV 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 Adyen NV 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 Adyen NV 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 Adyen NV i.e., Adyen NV and ING Groep go up and down completely randomly.

Pair Corralation between Adyen NV and ING Groep

Assuming the 90 days trading horizon Adyen NV is expected to generate 1.67 times more return on investment than ING Groep. However, Adyen NV is 1.67 times more volatile than ING Groep NV. It trades about 0.1 of its potential returns per unit of risk. ING Groep NV is currently generating about -0.14 per unit of risk. If you would invest  133,440  in Adyen NV on September 17, 2024 and sell it today you would earn a total of  15,580  from holding Adyen NV or generate 11.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Adyen NV  vs.  ING Groep NV

Adyen NV

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adyen NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Adyen NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ING Groep NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Adyen NV and ING Groep

The main advantage of trading using opposite Adyen NV and ING Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adyen NV 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.

The idea behind Adyen NV and ING Groep NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.