Correlation Between ETC On and SANTANDER
Can any of the company-specific risk be diversified away by investing in both ETC On 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 ETC On and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETC on CMCI and SANTANDER UK 10, you can compare the effects of market volatilities on ETC On 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 ETC On with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC On and SANTANDER.
Diversification Opportunities for ETC On and SANTANDER
Weak diversification
The 3 months correlation between ETC and SANTANDER is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ETC on CMCI 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 ETC On 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 ETC on CMCI 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 ETC On i.e., ETC On and SANTANDER go up and down completely randomly.
Pair Corralation between ETC On and SANTANDER
Assuming the 90 days trading horizon ETC On is expected to generate 5.79 times less return on investment than SANTANDER. But when comparing it to its historical volatility, ETC on CMCI is 1.26 times less risky than SANTANDER. It trades about 0.01 of its potential returns per unit of risk. SANTANDER UK 10 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11,771 in SANTANDER UK 10 on September 3, 2024 and sell it today you would earn a total of 4,099 from holding SANTANDER UK 10 or generate 34.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ETC on CMCI vs. SANTANDER UK 10
Performance |
| Timeline |
| ETC on CMCI |
| SANTANDER UK 10 |
ETC On and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETC On and SANTANDER
The main advantage of trading using opposite ETC On and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC On 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.| ETC On vs. Scottish Mortgage Investment | ETC On vs. VinaCapital Vietnam Opportunity | ETC On vs. Edinburgh Worldwide Investment | ETC On vs. Baillie Gifford Growth |
| SANTANDER vs. MediaZest plc | SANTANDER vs. Greenroc Mining PLC | SANTANDER vs. Blackrock World Mining | SANTANDER vs. One Media iP |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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