Correlation Between CNH Industrial and Banco Santander
Can any of the company-specific risk be diversified away by investing in both CNH Industrial 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 CNH Industrial and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and Banco Santander SA, you can compare the effects of market volatilities on CNH Industrial 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 CNH Industrial with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Banco Santander.
Diversification Opportunities for CNH Industrial and Banco Santander
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNH and Banco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV 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 CNH Industrial 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 CNH Industrial NV 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 CNH Industrial i.e., CNH Industrial and Banco Santander go up and down completely randomly.
Pair Corralation between CNH Industrial and Banco Santander
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.69 times more return on investment than Banco Santander. However, CNH Industrial is 1.69 times more volatile than Banco Santander SA. It trades about 0.2 of its potential returns per unit of risk. Banco Santander SA is currently generating about -0.01 per unit of risk. If you would invest 1,049 in CNH Industrial NV on August 30, 2024 and sell it today you would earn a total of 140.00 from holding CNH Industrial NV or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNH Industrial NV vs. Banco Santander SA
Performance |
| Timeline |
| CNH Industrial NV |
| Banco Santander SA |
CNH Industrial and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Banco Santander
The main advantage of trading using opposite CNH Industrial and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial 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.| CNH Industrial vs. SBM Offshore NV | CNH Industrial vs. UNIQA Insurance Group | CNH Industrial vs. AMAG Austria Metall | CNH Industrial vs. BKS Bank AG |
| Banco Santander vs. RATH Aktiengesellschaft | Banco Santander vs. AT S Austria | Banco Santander vs. BAWAG Group AG | Banco Santander vs. Semperit Aktiengesellschaft Holding |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |