Correlation Between TomTom NV and ING Groep

Can any of the company-specific risk be diversified away by investing in both TomTom 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 TomTom 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 TomTom NV and ING Groep NV, you can compare the effects of market volatilities on TomTom 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 TomTom NV with a short position of ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of TomTom NV and ING Groep.

Diversification Opportunities for TomTom NV and ING Groep

-0.18

Correlation Coefficient

TomTom NV  ING Groep

Good diversification

The 3 months correlation between TomTom and ING is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding TomTom 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 TomTom 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 TomTom 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 TomTom NV i.e., TomTom NV and ING Groep go up and down completely randomly.

Pair Corralation between TomTom NV and ING Groep

Assuming the 90 days trading horizon TomTom NV is expected to generate 4.85 times less return on investment than ING Groep. In addition to that, TomTom NV is 2.26 times more volatile than ING Groep NV. It trades about 0.02 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  1,488  in ING Groep NV on December 30, 2024 and sell it today you would earn a total of  342.00  from holding ING Groep NV or generate 22.98% return on investment over 90 days.

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

TomTom NV  vs.  ING Groep NV

TomTom NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TomTom NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TomTom NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ING Groep NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ING Groep NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ING Groep unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TomTom NV and ING Groep

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

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..