Correlation Between UBS Group and ING Group

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

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

Diversification Opportunities for UBS Group and ING Group

0.8

Correlation Coefficient

UBS Group  ING Group

Very poor diversification

The 3 months correlation between UBS and ING is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and ING Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Group NV and UBS 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 UBS Group AG are associated (or correlated) with ING Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Group NV has no effect on the direction of UBS Group i.e., UBS Group and ING Group go up and down completely randomly.

Pair Corralation between UBS Group and ING Group

Considering the 90-day investment horizon UBS Group AG is expected to generate 1.13 times more return on investment than ING Group. However, UBS Group is 1.13 times more volatile than ING Group NV. It trades about 0.06 of its potential returns per unit of risk. ING Group NV is currently generating about 0.05 per unit of risk. If you would invest  2,041  in UBS Group AG on November 19, 2024 and sell it today you would earn a total of  1,314  from holding UBS Group AG or generate 64.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

UBS Group AG  vs.  ING Group NV

UBS Group AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, UBS Group is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ING Group NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ING Group NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ING Group may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with UBS Group and ING Group

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

The idea behind UBS Group AG and ING Group 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 CEOs Directory module to screen CEOs from public companies around the world.