Correlation Between Mlk Foods and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Mlk Foods 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 Mlk Foods and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mlk Foods Public and Banco Santander SA, you can compare the effects of market volatilities on Mlk Foods 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 Mlk Foods with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mlk Foods and Banco Santander.
Diversification Opportunities for Mlk Foods and Banco Santander
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mlk and Banco is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mlk Foods Public 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 Mlk Foods 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 Mlk Foods Public 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 Mlk Foods i.e., Mlk Foods and Banco Santander go up and down completely randomly.
Pair Corralation between Mlk Foods and Banco Santander
Assuming the 90 days trading horizon Mlk Foods Public is expected to generate 2.95 times more return on investment than Banco Santander. However, Mlk Foods is 2.95 times more volatile than Banco Santander SA. It trades about 0.01 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.03 per unit of risk. If you would invest 138.00 in Mlk Foods Public on October 17, 2024 and sell it today you would lose (14.00) from holding Mlk Foods Public or give up 10.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mlk Foods Public vs. Banco Santander SA
Performance |
| Timeline |
| Mlk Foods Public |
| Banco Santander SA |
Mlk Foods and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mlk Foods and Banco Santander
The main advantage of trading using opposite Mlk Foods and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mlk Foods 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.| Mlk Foods vs. Medicofarma Biotech SA | Mlk Foods vs. New Tech Venture | Mlk Foods vs. PLAYWAY SA | Mlk Foods vs. SOFTWARE MANSION SPOLKA |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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