Correlation Between Apple and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Banco Santander SA, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Banco Santander.
Diversification Opportunities for Apple and Banco Santander
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Banco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and Apple 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 Apple Inc 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 SA has no effect on the direction of Apple i.e., Apple and Banco Santander go up and down completely randomly.
Pair Corralation between Apple and Banco Santander
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.41 times more return on investment than Banco Santander. However, Apple Inc is 2.46 times less risky than Banco Santander. It trades about 0.55 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.13 per unit of risk. If you would invest 6,548 in Apple Inc on September 14, 2024 and sell it today you would earn a total of 913.00 from holding Apple Inc or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Banco Santander SA
Performance |
| Timeline |
| Apple Inc |
| Banco Santander SA |
Apple and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Banco Santander
The main advantage of trading using opposite Apple and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Spotify Technology SA | Apple vs. Micron Technology | Apple vs. GX AI TECH | Apple vs. Marvell Technology |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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