Correlation Between Santander Bank and Erste Group
Can any of the company-specific risk be diversified away by investing in both Santander Bank and Erste Group 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 Santander Bank and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santander Bank Polska and Erste Group Bank, you can compare the effects of market volatilities on Santander Bank and Erste Group 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 Santander Bank with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and Erste Group.
Diversification Opportunities for Santander Bank and Erste Group
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Santander and Erste is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Santander Bank 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 Santander Bank Polska are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Santander Bank i.e., Santander Bank and Erste Group go up and down completely randomly.
Pair Corralation between Santander Bank and Erste Group
Assuming the 90 days horizon Santander Bank Polska is expected to generate 1.62 times more return on investment than Erste Group. However, Santander Bank is 1.62 times more volatile than Erste Group Bank. It trades about 0.14 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.19 per unit of risk. If you would invest 10,755 in Santander Bank Polska on October 23, 2024 and sell it today you would earn a total of 475.00 from holding Santander Bank Polska or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santander Bank Polska vs. Erste Group Bank
Performance |
| Timeline |
| Santander Bank Polska |
| Erste Group Bank |
Santander Bank and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santander Bank and Erste Group
The main advantage of trading using opposite Santander Bank and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Santander Bank vs. Madison Square Garden | Santander Bank vs. BII Railway Transportation | Santander Bank vs. High Liner Foods | Santander Bank vs. PARKEN Sport Entertainment |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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