Correlation Between COMMONWBK AUSTRSPADRS and Banco Santander
Can any of the company-specific risk be diversified away by investing in both COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMMONWBK AUSTRSPADRS and Banco Santander SA, you can compare the effects of market volatilities on COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMONWBK AUSTRSPADRS and Banco Santander.
Diversification Opportunities for COMMONWBK AUSTRSPADRS and Banco Santander
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COMMONWBK and Banco is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS i.e., COMMONWBK AUSTRSPADRS and Banco Santander go up and down completely randomly.
Pair Corralation between COMMONWBK AUSTRSPADRS and Banco Santander
Assuming the 90 days trading horizon COMMONWBK AUSTRSPADRS is expected to generate 0.8 times more return on investment than Banco Santander. However, COMMONWBK AUSTRSPADRS is 1.25 times less risky than Banco Santander. It trades about 0.14 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.05 per unit of risk. If you would invest 6,093 in COMMONWBK AUSTRSPADRS on September 2, 2024 and sell it today you would earn a total of 3,557 from holding COMMONWBK AUSTRSPADRS or generate 58.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMMONWBK AUSTRSPADRS vs. Banco Santander SA
Performance |
| Timeline |
| COMMONWBK AUSTRSPADRS |
| Banco Santander SA |
COMMONWBK AUSTRSPADRS and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMMONWBK AUSTRSPADRS and Banco Santander
The main advantage of trading using opposite COMMONWBK AUSTRSPADRS and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMONWBK AUSTRSPADRS 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.| COMMONWBK AUSTRSPADRS vs. Wayside Technology Group | COMMONWBK AUSTRSPADRS vs. MACOM Technology Solutions | COMMONWBK AUSTRSPADRS vs. PennantPark Investment | COMMONWBK AUSTRSPADRS vs. EAT WELL INVESTMENT |
| Banco Santander vs. CHINA BANK ADR20 | Banco Santander vs. AGRICULTBK HADR25 YC | Banco Santander vs. COMMONWBK AUSTRSPADRS | Banco Santander vs. The Toronto Dominion Bank |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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