Correlation Between IShares Trust and KB Financial

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

By analyzing existing cross correlation between iShares Trust and KB Financial Group, you can compare the effects of market volatilities on IShares Trust and KB Financial 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 IShares Trust with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and KB Financial.

Diversification Opportunities for IShares Trust and KB Financial

0.94

Correlation Coefficient

IShares Trust  KB Financial

Almost no diversification

The 3 months correlation between IShares and KB Financial is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and IShares Trust 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 iShares Trust are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of IShares Trust i.e., IShares Trust and KB Financial go up and down completely randomly.

Pair Corralation between IShares Trust and KB Financial

Given the investment horizon of 90 days IShares Trust is expected to generate 12.61 times less return on investment than KB Financial. But when comparing it to its historical volatility, iShares Trust is 16.16 times less risky than KB Financial. It trades about 0.3 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  6,034  in KB Financial Group on April 28, 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares Trust   vs.  KB Financial Group

iShares Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with IShares Trust and KB Financial

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

The idea behind iShares Trust and KB Financial Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.