Correlation Between Novartis and ING Groep

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

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

Diversification Opportunities for Novartis and ING Groep

0.34

Correlation Coefficient

Novartis  ING Groep

Weak diversification

The 3 months correlation between Novartis and ING is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Novartis AG and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV and Novartis 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 Novartis AG are associated (or correlated) with ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Novartis i.e., Novartis and ING Groep go up and down completely randomly.

Pair Corralation between Novartis and ING Groep

Assuming the 90 days trading horizon Novartis is expected to generate 34.96 times less return on investment than ING Groep. But when comparing it to its historical volatility, Novartis AG is 1.46 times less risky than ING Groep. It trades about 0.01 of its potential returns per unit of risk. ING Groep NV is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,664  in ING Groep NV on April 24, 2025 and sell it today you would earn a total of  291.00  from holding ING Groep NV or generate 17.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Novartis AG  vs.  ING Groep NV

Novartis AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novartis AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Novartis is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ING Groep NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ING Groep NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ING Groep unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novartis and ING Groep

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

The idea behind Novartis AG and ING 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..