Correlation Between Air Products and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Air Products and Banco 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 Air Products and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Banco Santander Chile, you can compare the effects of market volatilities on Air Products and Banco 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 Air Products with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Banco Santander.
Diversification Opportunities for Air Products and Banco Santander
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Banco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Banco Santander Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Chile and Air Products 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 Air Products and are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander Chile has no effect on the direction of Air Products i.e., Air Products and Banco Santander go up and down completely randomly.
Pair Corralation between Air Products and Banco Santander
Assuming the 90 days trading horizon Air Products and is expected to under-perform the Banco Santander. In addition to that, Air Products is 1.81 times more volatile than Banco Santander Chile. It trades about -0.34 of its total potential returns per unit of risk. Banco Santander Chile is currently generating about -0.26 per unit of volatility. If you would invest 5,868 in Banco Santander Chile on October 11, 2024 and sell it today you would lose (269.00) from holding Banco Santander Chile or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Air Products and vs. Banco Santander Chile
Performance |
| Timeline |
| Air Products |
| Banco Santander Chile |
Air Products and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Banco Santander
The main advantage of trading using opposite Air Products and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Banco 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| Air Products vs. Taiwan Semiconductor Manufacturing | Air Products vs. Apple Inc | Air Products vs. Alibaba Group Holding | Air Products vs. Banco Santander Chile |
| Banco Santander vs. Air Products and | Banco Santander vs. Molson Coors Beverage | Banco Santander vs. Telecomunicaes Brasileiras SA | Banco Santander vs. Ryanair Holdings plc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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