Correlation Between Microsoft and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Banco Santander, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Banco Santander.
Diversification Opportunities for Microsoft and Banco Santander
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Banco is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Banco Santander in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Banco Santander go up and down completely randomly.
Pair Corralation between Microsoft and Banco Santander
Given the investment horizon of 90 days Microsoft is expected to under-perform the Banco Santander. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.16 times less risky than Banco Santander. The stock trades about -0.04 of its potential returns per unit of risk. The Banco Santander is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 439.00 in Banco Santander on August 30, 2024 and sell it today you would lose (1.00) from holding Banco Santander or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Banco Santander
Performance |
| Timeline |
| Microsoft |
| Banco Santander |
Microsoft and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Banco Santander
The main advantage of trading using opposite Microsoft and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Banco Santander vs. Repsol | Banco Santander vs. Iberdrola SA | Banco Santander vs. Banco de Sabadell | Banco Santander vs. Caixabank 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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