Correlation Between ING Groep and FORMPIPE SOFTWARE
Can any of the company-specific risk be diversified away by investing in both ING Groep and FORMPIPE SOFTWARE 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 ING Groep and FORMPIPE SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Groep NV and FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on ING Groep and FORMPIPE SOFTWARE 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 ING Groep with a short position of FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Groep and FORMPIPE SOFTWARE.
Diversification Opportunities for ING Groep and FORMPIPE SOFTWARE
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ING and FORMPIPE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE and ING Groep 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 ING Groep NV are associated (or correlated) with FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of ING Groep i.e., ING Groep and FORMPIPE SOFTWARE go up and down completely randomly.
Pair Corralation between ING Groep and FORMPIPE SOFTWARE
Assuming the 90 days trading horizon ING Groep NV is expected to generate 0.56 times more return on investment than FORMPIPE SOFTWARE. However, ING Groep NV is 1.78 times less risky than FORMPIPE SOFTWARE. It trades about 0.24 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about 0.12 per unit of risk. If you would invest 1,496 in ING Groep NV on December 28, 2024 and sell it today you would earn a total of 365.00 from holding ING Groep NV or generate 24.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ING Groep NV vs. FORMPIPE SOFTWARE AB
Performance |
Timeline |
ING Groep NV |
FORMPIPE SOFTWARE |
ING Groep and FORMPIPE SOFTWARE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ING Groep and FORMPIPE SOFTWARE
The main advantage of trading using opposite ING Groep and FORMPIPE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Groep position performs unexpectedly, FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE will offset losses from the drop in FORMPIPE SOFTWARE's long position.ING Groep vs. CENTURIA OFFICE REIT | ING Groep vs. UNIQA INSURANCE GR | ING Groep vs. Goosehead Insurance | ING Groep vs. MUTUIONLINE |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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