Correlation Between Fentura Financial and KBC Groep

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

By analyzing existing cross correlation between Fentura Financial and KBC Groep NV, you can compare the effects of market volatilities on Fentura Financial and KBC Groep 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 Fentura Financial with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fentura Financial and KBC Groep.

Diversification Opportunities for Fentura Financial and KBC Groep

-0.42

Correlation Coefficient

Fentura Financial  KBC Groep

Very good diversification

The 3 months correlation between Fentura and KBC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fentura Financial and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV and Fentura 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 Fentura Financial are associated (or correlated) with KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Fentura Financial i.e., Fentura Financial and KBC Groep go up and down completely randomly.

Pair Corralation between Fentura Financial and KBC Groep

Given the investment horizon of 90 days Fentura Financial is expected to generate 1.4 times more return on investment than KBC Groep. However, Fentura Financial is 1.4 times more volatile than KBC Groep NV. It trades about 0.15 of its potential returns per unit of risk. KBC Groep NV is currently generating about -0.02 per unit of risk. If you would invest  3,914  in Fentura Financial on September 4, 2024 and sell it today you would earn a total of  686.00  from holding Fentura Financial or generate 17.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Fentura Financial  vs.  KBC Groep NV

Fentura Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fentura Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fentura Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

KBC Groep NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBC Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, KBC Groep is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fentura Financial and KBC Groep

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

The idea behind Fentura Financial and KBC Groep NV 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.