Correlation Between Banco Santander and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Barclays 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 Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander SA and Barclays PLC, you can compare the effects of market volatilities on Banco Santander and Barclays 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Barclays PLC.
Diversification Opportunities for Banco Santander and Barclays PLC
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Banco and Barclays is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays 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 SA are associated (or correlated) with Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC has no effect on the direction of Banco Santander i.e., Banco Santander and Barclays PLC go up and down completely randomly.
Pair Corralation between Banco Santander and Barclays PLC
Assuming the 90 days horizon Banco Santander SA is expected to generate 1.58 times more return on investment than Barclays PLC. However, Banco Santander is 1.58 times more volatile than Barclays PLC. It trades about 0.05 of its potential returns per unit of risk. Barclays PLC is currently generating about 0.07 per unit of risk. If you would invest 341.00 in Banco Santander SA on September 2, 2024 and sell it today you would earn a total of 114.00 from holding Banco Santander SA or generate 33.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.43% |
| Values | Daily Returns |
Banco Santander SA vs. Barclays PLC
Performance |
| Timeline |
| Banco Santander SA |
| Barclays PLC |
Banco Santander and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Barclays PLC
The main advantage of trading using opposite Banco Santander and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Barclays 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| Banco Santander vs. Bank of America | Banco Santander vs. Bank of America | Banco Santander vs. Bank of America | Banco Santander vs. Bank of America |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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