Correlation Between Enter Air and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Enter Air 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 Enter Air and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enter Air SA and Banco Santander SA, you can compare the effects of market volatilities on Enter Air 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 Enter Air with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enter Air and Banco Santander.
Diversification Opportunities for Enter Air and Banco Santander
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enter and Banco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Enter Air SA 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 Enter Air 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 Enter Air SA 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 Enter Air i.e., Enter Air and Banco Santander go up and down completely randomly.
Pair Corralation between Enter Air and Banco Santander
Assuming the 90 days trading horizon Enter Air SA is expected to generate 1.27 times more return on investment than Banco Santander. However, Enter Air is 1.27 times more volatile than Banco Santander SA. It trades about 0.07 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.07 per unit of risk. If you would invest 3,118 in Enter Air SA on December 12, 2024 and sell it today you would earn a total of 2,712 from holding Enter Air SA or generate 86.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.98% |
| Values | Daily Returns |
Enter Air SA vs. Banco Santander SA
Performance |
| Timeline |
| Enter Air SA |
| Banco Santander SA |
Enter Air and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enter Air and Banco Santander
The main advantage of trading using opposite Enter Air and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enter Air 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.| Enter Air vs. Fintech SA | ||
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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