Correlation Between ING Bank and Santander Bank
Can any of the company-specific risk be diversified away by investing in both ING Bank 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 ING Bank and Santander Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Bank lski and Santander Bank Polska, you can compare the effects of market volatilities on ING Bank 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 ING Bank with a short position of Santander Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Bank and Santander Bank.
Diversification Opportunities for ING Bank and Santander Bank
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ING and Santander is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski 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 ING Bank 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 ING Bank lski 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 ING Bank i.e., ING Bank and Santander Bank go up and down completely randomly.
Pair Corralation between ING Bank and Santander Bank
Assuming the 90 days trading horizon ING Bank lski is expected to under-perform the Santander Bank. But the stock apears to be less risky and, when comparing its historical volatility, ING Bank lski is 1.34 times less risky than Santander Bank. The stock trades about -0.21 of its potential returns per unit of risk. The Santander Bank Polska is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 44,880 in Santander Bank Polska on August 28, 2024 and sell it today you would lose (320.00) from holding Santander Bank Polska or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Bank lski vs. Santander Bank Polska
Performance |
| Timeline |
| ING Bank lski |
| Santander Bank Polska |
ING Bank and Santander Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Bank and Santander Bank
The main advantage of trading using opposite ING Bank and Santander Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Bank 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.The idea behind ING Bank lski and Santander Bank Polska pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Santander Bank vs. GreenX Metals | Santander Bank vs. LSI Software SA | Santander Bank vs. UniCredit SpA | Santander Bank vs. Noble Financials SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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