Correlation Between KBC Groep and Intesa Sanpaolo

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

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

Diversification Opportunities for KBC Groep and Intesa Sanpaolo

0.96

Correlation Coefficient

KBC Groep  Intesa Sanpaolo

Almost no diversification

The 3 months correlation between KBC and Intesa is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and Intesa Sanpaolo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intesa Sanpaolo SpA and KBC 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 KBC Groep NV are associated (or correlated) with Intesa Sanpaolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intesa Sanpaolo SpA has no effect on the direction of KBC Groep i.e., KBC Groep and Intesa Sanpaolo go up and down completely randomly.

Pair Corralation between KBC Groep and Intesa Sanpaolo

Assuming the 90 days horizon KBC Groep is expected to generate 1.32 times less return on investment than Intesa Sanpaolo. In addition to that, KBC Groep is 1.12 times more volatile than Intesa Sanpaolo SpA. It trades about 0.2 of its total potential returns per unit of risk. Intesa Sanpaolo SpA is currently generating about 0.3 per unit of volatility. If you would invest  2,419  in Intesa Sanpaolo SpA on December 28, 2024 and sell it today you would earn a total of  761.00  from holding Intesa Sanpaolo SpA or generate 31.46% return on investment over 90 days.

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

KBC Groep NV  vs.  Intesa Sanpaolo SpA

KBC Groep NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Groep NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, KBC Groep showed solid returns over the last few months and may actually be approaching a breakup point.

Intesa Sanpaolo SpA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intesa Sanpaolo SpA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Intesa Sanpaolo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KBC Groep and Intesa Sanpaolo

The main advantage of trading using opposite KBC Groep and Intesa Sanpaolo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Groep position performs unexpectedly, Intesa Sanpaolo 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 Intesa Sanpaolo will offset losses from the drop in Intesa Sanpaolo's long position.

The idea behind KBC Groep NV and Intesa Sanpaolo SpA 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.