Correlation Between Barclays PLC and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Barclays PLC 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 Barclays PLC and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays PLC ADR and Banco Santander SA, you can compare the effects of market volatilities on Barclays PLC 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 Barclays PLC with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Banco Santander.
Diversification Opportunities for Barclays PLC and Banco Santander
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barclays and Banco is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC ADR 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 Barclays PLC 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 Barclays PLC ADR 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 Barclays PLC i.e., Barclays PLC and Banco Santander go up and down completely randomly.
Pair Corralation between Barclays PLC and Banco Santander
Considering the 90-day investment horizon Barclays PLC ADR is expected to generate 0.44 times more return on investment than Banco Santander. However, Barclays PLC ADR is 2.29 times less risky than Banco Santander. It trades about 0.15 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.03 per unit of risk. If you would invest 1,253 in Barclays PLC ADR on November 1, 2024 and sell it today you would earn a total of 227.00 from holding Barclays PLC ADR or generate 18.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
Barclays PLC ADR vs. Banco Santander SA
Performance |
| Timeline |
| Barclays PLC ADR |
| Banco Santander SA |
Barclays PLC and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays PLC and Banco Santander
The main advantage of trading using opposite Barclays PLC and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC 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.| Barclays PLC vs. Banco Bilbao Viscaya | Barclays PLC vs. Banco Santander SA | Barclays PLC vs. UBS Group AG | Barclays PLC vs. HSBC Holdings PLC |
| Banco Santander vs. Banco Bilbao Viscaya | Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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