Correlation Between Banco Santander and Mitsubishi Gas
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Mitsubishi Gas 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 Mitsubishi Gas 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 Mitsubishi Gas Chemical, you can compare the effects of market volatilities on Banco Santander and Mitsubishi Gas 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 Mitsubishi Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Mitsubishi Gas.
Diversification Opportunities for Banco Santander and Mitsubishi Gas
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Banco and Mitsubishi is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Mitsubishi Gas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Gas Chemical 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 Mitsubishi Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Gas Chemical has no effect on the direction of Banco Santander i.e., Banco Santander and Mitsubishi Gas go up and down completely randomly.
Pair Corralation between Banco Santander and Mitsubishi Gas
Assuming the 90 days trading horizon Banco Santander SA is expected to generate 1.12 times more return on investment than Mitsubishi Gas. However, Banco Santander is 1.12 times more volatile than Mitsubishi Gas Chemical. It trades about 0.07 of its potential returns per unit of risk. Mitsubishi Gas Chemical is currently generating about 0.04 per unit of risk. If you would invest 246.00 in Banco Santander SA on September 4, 2024 and sell it today you would earn a total of 182.00 from holding Banco Santander SA or generate 73.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander SA vs. Mitsubishi Gas Chemical
Performance |
| Timeline |
| Banco Santander SA |
| Mitsubishi Gas Chemical |
Banco Santander and Mitsubishi Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Mitsubishi Gas
The main advantage of trading using opposite Banco Santander and Mitsubishi Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Mitsubishi Gas 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 Mitsubishi Gas will offset losses from the drop in Mitsubishi Gas' long position.| Banco Santander vs. Mitsubishi Gas Chemical | Banco Santander vs. GLG LIFE TECH | Banco Santander vs. Darden Restaurants | Banco Santander vs. PTT Global Chemical |
| Mitsubishi Gas vs. INDOFOOD AGRI RES | Mitsubishi Gas vs. Virtus Investment Partners | Mitsubishi Gas vs. EAT WELL INVESTMENT | Mitsubishi Gas vs. Dairy Farm International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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