Correlation Between National Australia and Banco Santander
Can any of the company-specific risk be diversified away by investing in both National Australia 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 National Australia and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Australia Bank and Banco Santander SA, you can compare the effects of market volatilities on National Australia 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 National Australia with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Banco Santander.
Diversification Opportunities for National Australia and Banco Santander
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Banco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank 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 National Australia 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 National Australia Bank 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 National Australia i.e., National Australia and Banco Santander go up and down completely randomly.
Pair Corralation between National Australia and Banco Santander
Assuming the 90 days horizon National Australia Bank is expected to generate 1.33 times more return on investment than Banco Santander. However, National Australia is 1.33 times more volatile than Banco Santander SA. It trades about 0.04 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.05 per unit of risk. If you would invest 2,073 in National Australia Bank on August 23, 2024 and sell it today you would earn a total of 450.00 from holding National Australia Bank or generate 21.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.46% |
| Values | Daily Returns |
National Australia Bank vs. Banco Santander SA
Performance |
| Timeline |
| National Australia Bank |
| Banco Santander SA |
National Australia and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Banco Santander
The main advantage of trading using opposite National Australia and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia 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.| National Australia vs. National Australia Bank | National Australia vs. China Construction Bank | National Australia vs. Bank of America | National Australia vs. ANZ Group Holdings |
| Banco Santander vs. Svenska Handelsbanken PK | Banco Santander vs. ANZ Group Holdings | Banco Santander vs. Westpac Banking | Banco Santander vs. National Australia Bank |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |