Correlation Between Grupo Catalana and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Grupo Catalana 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 Grupo Catalana and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Catalana Occidente and Banco Santander, you can compare the effects of market volatilities on Grupo Catalana 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 Grupo Catalana with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Catalana and Banco Santander.
Diversification Opportunities for Grupo Catalana and Banco Santander
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and Banco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Catalana Occidente and Banco Santander in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander and Grupo Catalana 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 Grupo Catalana Occidente 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 has no effect on the direction of Grupo Catalana i.e., Grupo Catalana and Banco Santander go up and down completely randomly.
Pair Corralation between Grupo Catalana and Banco Santander
Assuming the 90 days trading horizon Grupo Catalana is expected to generate 2.09 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Grupo Catalana Occidente is 1.79 times less risky than Banco Santander. It trades about 0.06 of its potential returns per unit of risk. Banco Santander is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 256.00 in Banco Santander on August 30, 2024 and sell it today you would earn a total of 182.00 from holding Banco Santander or generate 71.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Catalana Occidente vs. Banco Santander
Performance |
| Timeline |
| Grupo Catalana Occidente |
| Banco Santander |
Grupo Catalana and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Catalana and Banco Santander
The main advantage of trading using opposite Grupo Catalana and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Catalana 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.| Grupo Catalana vs. Metrovacesa SA | Grupo Catalana vs. Atom Hoteles Socimi | Grupo Catalana vs. Aedas Homes SL | Grupo Catalana vs. Hispanotels Inversiones SOCIMI |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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