Correlation Between Natwest Group and ING Groep
Can any of the company-specific risk be diversified away by investing in both Natwest Group 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 Natwest Group and ING Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natwest Group PLC and ING Groep NV, you can compare the effects of market volatilities on Natwest Group 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 Natwest Group with a short position of ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natwest Group and ING Groep.
Diversification Opportunities for Natwest Group and ING Groep
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Natwest and ING is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Natwest Group PLC 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 Natwest Group 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 Natwest Group PLC 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 Natwest Group i.e., Natwest Group and ING Groep go up and down completely randomly.
Pair Corralation between Natwest Group and ING Groep
Considering the 90-day investment horizon Natwest Group is expected to generate 1.33 times less return on investment than ING Groep. In addition to that, Natwest Group is 1.15 times more volatile than ING Groep NV. It trades about 0.16 of its total potential returns per unit of risk. ING Groep NV is currently generating about 0.24 per unit of volatility. If you would invest 1,520 in ING Groep NV on December 27, 2024 and sell it today you would earn a total of 415.00 from holding ING Groep NV or generate 27.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 86.67% |
Values | Daily Returns |
Natwest Group PLC vs. ING Groep NV
Performance |
Timeline |
Natwest Group PLC |
ING Groep NV |
Natwest Group and ING Groep Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Natwest Group and ING Groep
The main advantage of trading using opposite Natwest Group and ING Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natwest Group 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.Natwest Group vs. ING Group NV | Natwest Group vs. HSBC Holdings PLC | Natwest Group vs. Banco Santander SA | Natwest Group vs. UBS Group AG |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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