Correlation Between KB Financial and Valley National

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Can any of the company-specific risk be diversified away by investing in both KB Financial and Valley National 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 KB Financial and Valley National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Financial Group and Valley National Bancorp, you can compare the effects of market volatilities on KB Financial and Valley National 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 KB Financial with a short position of Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Valley National.

Diversification Opportunities for KB Financial and Valley National

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between KB Financial and Valley is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp and KB Financial 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 KB Financial Group are associated (or correlated) with Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of KB Financial i.e., KB Financial and Valley National go up and down completely randomly.

Pair Corralation between KB Financial and Valley National

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.02 times more return on investment than Valley National. However, KB Financial is 1.02 times more volatile than Valley National Bancorp. It trades about 0.1 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.01 per unit of risk. If you would invest  5,147  in KB Financial Group on February 7, 2024 and sell it today you would earn a total of  330.00  from holding KB Financial Group or generate 6.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

KB Financial Group  vs.  Valley National Bancorp

 Performance 
       Timeline  
KB Financial Group 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.
Valley National Bancorp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Valley National Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Valley National is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

KB Financial and Valley National Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KB Financial and Valley National

The main advantage of trading using opposite KB Financial and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National's long position.
The idea behind KB Financial Group and Valley National Bancorp 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.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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