Correlation Between Merck and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Banco Santander SA, you can compare the effects of market volatilities on Merck 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 Merck with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Banco Santander.
Diversification Opportunities for Merck and Banco Santander
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Merck and Banco is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company 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 Merck 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 Merck Company 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 Merck i.e., Merck and Banco Santander go up and down completely randomly.
Pair Corralation between Merck and Banco Santander
If you would invest 16,723 in Banco Santander SA on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Banco Santander SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Merck Company vs. Banco Santander SA
Performance |
| Timeline |
| Merck Company |
| Banco Santander SA |
Merck and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Banco Santander
The main advantage of trading using opposite Merck and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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.| Merck vs. Harmony Gold Mining | Merck vs. Compania de Transporte | Merck vs. Agrometal SAI | Merck vs. United States Steel |
| Banco Santander vs. Procter Gamble DRC | Banco Santander vs. Merck Company | Banco Santander vs. Walt Disney | Banco Santander vs. Longvie 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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