Correlation Between KB Financial and Texas Capital

Can any of the company-specific risk be diversified away by investing in both KB Financial and Texas Capital 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 Texas Capital 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 Texas Capital Bancshares, you can compare the effects of market volatilities on KB Financial and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Texas Capital.

Diversification Opportunities for KB Financial and Texas Capital

0.89

Correlation Coefficient

KB Financial  Texas Capital

Very poor diversification

The 3 months correlation between KB Financial and Texas is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of KB Financial i.e., KB Financial and Texas Capital go up and down completely randomly.

Pair Corralation between KB Financial and Texas Capital

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 3.48 times more return on investment than Texas Capital. However, KB Financial is 3.48 times more volatile than Texas Capital Bancshares. It trades about 0.24 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.09 per unit of risk. If you would invest  6,034  in KB Financial Group on April 27, 2025 and sell it today you would earn a total of  2,557  from holding KB Financial Group or generate 42.38% return on investment over 90 days.

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

KB Financial Group  vs.  Texas Capital Bancshares

KB Financial Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 18 (%) 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.

Texas Capital Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Capital Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Texas Capital is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KB Financial and Texas Capital

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

The idea behind KB Financial Group and Texas Capital Bancshares 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.