Correlation Between ING Group and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both ING Group and Bank of Montreal 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 ING Group and Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Group NV and Bank of Montreal, you can compare the effects of market volatilities on ING Group and Bank of Montreal 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 ING Group with a short position of Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Group and Bank of Montreal.
Diversification Opportunities for ING Group and Bank of Montreal
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ING and Bank is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ING Group NV and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal and ING 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 ING Group NV are associated (or correlated) with Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of ING Group i.e., ING Group and Bank of Montreal go up and down completely randomly.
Pair Corralation between ING Group and Bank of Montreal
Considering the 90-day investment horizon ING Group NV is expected to generate 1.43 times more return on investment than Bank of Montreal. However, ING Group is 1.43 times more volatile than Bank of Montreal. It trades about 0.09 of its potential returns per unit of risk. Bank of Montreal is currently generating about -0.2 per unit of risk. If you would invest 1,578 in ING Group NV on January 21, 2024 and sell it today you would earn a total of 42.00 from holding ING Group NV or generate 2.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Group NV vs. Bank of Montreal
Performance |
| Timeline |
| ING Group NV |
| Bank of Montreal |
ING Group and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Group and Bank of Montreal
The main advantage of trading using opposite ING Group and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Group position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.| ING Group vs. Natwest Group PLC | ING Group vs. HSBC Holdings PLC | ING Group vs. Banco Santander SA | ING Group vs. UBS Group AG |
| Bank of Montreal vs. Canadian Imperial Bank | Bank of Montreal vs. Toronto Dominion Bank | Bank of Montreal vs. Royal Bank of | Bank of Montreal vs. Citigroup |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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