Correlation Between Sparebank and SANTANDER
Can any of the company-specific risk be diversified away by investing in both Sparebank 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 Sparebank and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SR and SANTANDER UK 10, you can compare the effects of market volatilities on Sparebank 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 Sparebank with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and SANTANDER.
Diversification Opportunities for Sparebank and SANTANDER
Very weak diversification
The 3 months correlation between Sparebank and SANTANDER is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and SANTANDER UK 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 10 and Sparebank 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 Sparebank 1 SR 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 10 has no effect on the direction of Sparebank i.e., Sparebank and SANTANDER go up and down completely randomly.
Pair Corralation between Sparebank and SANTANDER
Assuming the 90 days trading horizon Sparebank 1 SR is expected to generate 1.37 times more return on investment than SANTANDER. However, Sparebank is 1.37 times more volatile than SANTANDER UK 10. It trades about 0.06 of its potential returns per unit of risk. SANTANDER UK 10 is currently generating about 0.06 per unit of risk. If you would invest 10,501 in Sparebank 1 SR on September 12, 2024 and sell it today you would earn a total of 4,099 from holding Sparebank 1 SR or generate 39.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sparebank 1 SR vs. SANTANDER UK 10
Performance |
| Timeline |
| Sparebank 1 SR |
| SANTANDER UK 10 |
Sparebank and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and SANTANDER
The main advantage of trading using opposite Sparebank and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank 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.| Sparebank vs. Aeorema Communications Plc | Sparebank vs. Premier Foods PLC | Sparebank vs. Aurora Investment Trust | Sparebank vs. Diversified Energy |
| SANTANDER vs. Alior Bank SA | SANTANDER vs. Zegona Communications Plc | SANTANDER vs. Sparebank 1 SR | SANTANDER vs. Cembra Money Bank |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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