Correlation Between KBC Groep and Banque Nationale
Can any of the company-specific risk be diversified away by investing in both KBC Groep and Banque Nationale 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 Banque Nationale 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 Banque nationale de, you can compare the effects of market volatilities on KBC Groep and Banque Nationale 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 Banque Nationale. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBC Groep and Banque Nationale.
Diversification Opportunities for KBC Groep and Banque Nationale
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KBC and Banque is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and Banque nationale de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banque nationale 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 Banque Nationale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banque nationale has no effect on the direction of KBC Groep i.e., KBC Groep and Banque Nationale go up and down completely randomly.
Pair Corralation between KBC Groep and Banque Nationale
Assuming the 90 days trading horizon KBC Groep NV is expected to generate 0.62 times more return on investment than Banque Nationale. However, KBC Groep NV is 1.61 times less risky than Banque Nationale. It trades about 0.04 of its potential returns per unit of risk. Banque nationale de is currently generating about -0.07 per unit of risk. If you would invest 5,467 in KBC Groep NV on January 20, 2024 and sell it today you would earn a total of 1,493 from holding KBC Groep NV or generate 27.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBC Groep NV vs. Banque nationale de
Performance |
| Timeline |
| KBC Groep NV |
| Banque nationale |
KBC Groep and Banque Nationale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBC Groep and Banque Nationale
The main advantage of trading using opposite KBC Groep and Banque Nationale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Groep position performs unexpectedly, Banque Nationale 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 Banque Nationale will offset losses from the drop in Banque Nationale's long position.The idea behind KBC Groep NV and Banque nationale de 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.| Banque Nationale vs. GIMV NV | Banque Nationale vs. Sofina Socit Anonyme | Banque Nationale vs. Groep Brussel Lambert | Banque Nationale vs. Tubize Fin |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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