Correlation Between ING Group and Banco Santander
Can any of the company-specific risk be diversified away by investing in both ING Group 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 ING Group and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Group NV and Banco Santander SA, you can compare the effects of market volatilities on ING Group 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 ING Group with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Group and Banco Santander.
Diversification Opportunities for ING Group and Banco Santander
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ING and Banco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ING Group 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 ING Group 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 Group 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 ING Group i.e., ING Group and Banco Santander go up and down completely randomly.
Pair Corralation between ING Group and Banco Santander
Considering the 90-day investment horizon ING Group is expected to generate 2.65 times less return on investment than Banco Santander. But when comparing it to its historical volatility, ING Group NV is 3.07 times less risky than Banco Santander. It trades about 0.06 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 282.00 in Banco Santander SA on August 30, 2024 and sell it today you would earn a total of 163.00 from holding Banco Santander SA or generate 57.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 79.03% |
| Values | Daily Returns |
ING Group NV vs. Banco Santander SA
Performance |
| Timeline |
| ING Group NV |
| Banco Santander SA |
ING Group and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Group and Banco Santander
The main advantage of trading using opposite ING Group and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Group 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.| ING Group vs. Natwest Group PLC | ING Group vs. HSBC Holdings PLC | ING Group vs. Banco Santander SA | ING Group vs. UBS Group AG |
| Banco Santander vs. ANZ Group Holdings | Banco Santander vs. National Australia Bank | Banco Santander vs. Agricultural Bank | Banco Santander vs. Bank of America |
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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