Correlation Between BII Railway and Santander Bank
Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and Santander Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Santander Bank Polska, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of Santander Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Santander Bank.
Diversification Opportunities for BII Railway and Santander Bank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BII and Santander is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Santander Bank go up and down completely randomly.
Pair Corralation between BII Railway and Santander Bank
Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the Santander Bank. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 1.26 times less risky than Santander Bank. The stock trades about -0.04 of its potential returns per unit of risk. The Santander Bank Polska is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 10,800 in Santander Bank Polska on November 3, 2024 and sell it today you would earn a total of 1,350 from holding Santander Bank Polska or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Santander Bank Polska
Performance |
| Timeline |
| BII Railway Transpor |
| Santander Bank Polska |
BII Railway and Santander Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Santander Bank
The main advantage of trading using opposite BII Railway and Santander Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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.| BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. International Business Machines | BII Railway vs. Capgemini SE |
| Santander Bank vs. WT OFFSHORE | Santander Bank vs. Take Two Interactive Software | Santander Bank vs. CSSC Offshore Marine | Santander Bank vs. PRECISION DRILLING P |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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