Correlation Between CEZ As and Santander Bank
Can any of the company-specific risk be diversified away by investing in both CEZ As and Santander Bank 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 CEZ As and Santander Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and Santander Bank Polska, you can compare the effects of market volatilities on CEZ As and Santander Bank 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 CEZ As with a short position of Santander Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Santander Bank.
Diversification Opportunities for CEZ As and Santander Bank
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CEZ and Santander is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Santander Bank Polska in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santander Bank Polska and CEZ As 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 CEZ as are associated (or correlated) with Santander Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santander Bank Polska has no effect on the direction of CEZ As i.e., CEZ As and Santander Bank go up and down completely randomly.
Pair Corralation between CEZ As and Santander Bank
Assuming the 90 days trading horizon CEZ As is expected to generate 1.26 times less return on investment than Santander Bank. In addition to that, CEZ As is 1.37 times more volatile than Santander Bank Polska. It trades about 0.14 of its total potential returns per unit of risk. Santander Bank Polska is currently generating about 0.24 per unit of volatility. If you would invest 44,450 in Santander Bank Polska on November 3, 2024 and sell it today you would earn a total of 6,250 from holding Santander Bank Polska or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ as vs. Santander Bank Polska
Performance |
| Timeline |
| CEZ as |
| Santander Bank Polska |
CEZ As and Santander Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and Santander Bank
The main advantage of trading using opposite CEZ As and Santander Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, Santander Bank 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 Santander Bank will offset losses from the drop in Santander Bank's long position.| CEZ As vs. Gremi Media SA | CEZ As vs. ING Bank lski | CEZ As vs. Varsav Game Studios | CEZ As vs. True Games Syndicate |
| Santander Bank vs. UniCredit SpA | Santander Bank vs. Bank Polska Kasa | Santander Bank vs. ING Bank lski | Santander Bank vs. mBank SA |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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