Correlation Between SM Energy and SANTANDER
Can any of the company-specific risk be diversified away by investing in both SM Energy and SANTANDER 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 SM Energy and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Energy Co and SANTANDER UK 8, you can compare the effects of market volatilities on SM Energy and SANTANDER 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 SM Energy with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and SANTANDER.
Diversification Opportunities for SM Energy and SANTANDER
Very good diversification
The 3 months correlation between 0KZA and SANTANDER is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 and SM Energy 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 SM Energy Co are associated (or correlated) with SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 8 has no effect on the direction of SM Energy i.e., SM Energy and SANTANDER go up and down completely randomly.
Pair Corralation between SM Energy and SANTANDER
Assuming the 90 days trading horizon SM Energy Co is expected to under-perform the SANTANDER. In addition to that, SM Energy is 21.13 times more volatile than SANTANDER UK 8. It trades about -0.13 of its total potential returns per unit of risk. SANTANDER UK 8 is currently generating about 0.0 per unit of volatility. If you would invest 13,550 in SANTANDER UK 8 on September 12, 2024 and sell it today you would earn a total of 0.00 from holding SANTANDER UK 8 or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SM Energy Co vs. SANTANDER UK 8
Performance |
| Timeline |
| SM Energy |
| SANTANDER UK 8 |
SM Energy and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Energy and SANTANDER
The main advantage of trading using opposite SM Energy and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy position performs unexpectedly, SANTANDER 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 SANTANDER will offset losses from the drop in SANTANDER's long position.| SM Energy vs. Hong Kong Land | SM Energy vs. Neometals | SM Energy vs. Coor Service Management | SM Energy vs. Fidelity Sustainable USD |
| SANTANDER vs. Vulcan Materials Co | SANTANDER vs. Ryanair Holdings plc | SANTANDER vs. Morgan Advanced Materials | SANTANDER vs. Amedeo Air Four |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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