Correlation Between Banco Santander and Pentair Plc
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Pentair Plc 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 Banco Santander and Pentair Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Chile and Pentair plc, you can compare the effects of market volatilities on Banco Santander and Pentair Plc 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 Banco Santander with a short position of Pentair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Pentair Plc.
Diversification Opportunities for Banco Santander and Pentair Plc
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Banco and Pentair is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc and Banco Santander 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 Banco Santander Chile are associated (or correlated) with Pentair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair plc has no effect on the direction of Banco Santander i.e., Banco Santander and Pentair Plc go up and down completely randomly.
Pair Corralation between Banco Santander and Pentair Plc
Assuming the 90 days trading horizon Banco Santander Chile is expected to generate 2.83 times more return on investment than Pentair Plc. However, Banco Santander is 2.83 times more volatile than Pentair plc. It trades about 0.0 of its potential returns per unit of risk. Pentair plc is currently generating about -0.11 per unit of risk. If you would invest 5,868 in Banco Santander Chile on October 25, 2024 and sell it today you would earn a total of 0.00 from holding Banco Santander Chile or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Chile vs. Pentair plc
Performance |
| Timeline |
| Banco Santander Chile |
| Pentair plc |
Banco Santander and Pentair Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Pentair Plc
The main advantage of trading using opposite Banco Santander and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Pentair Plc 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 Pentair Plc will offset losses from the drop in Pentair Plc's long position.| Banco Santander vs. Teladoc Health | Banco Santander vs. Ameriprise Financial | Banco Santander vs. Credit Acceptance | Banco Santander vs. The Hartford Financial |
| Pentair Plc vs. Zoom Video Communications | Pentair Plc vs. Fresenius Medical Care | Pentair Plc vs. Telecomunicaes Brasileiras SA | Pentair Plc vs. Charter Communications |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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