Correlation Between Bank Polska and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Bank Polska 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 Bank Polska and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Polska Kasa and Banco Santander SA, you can compare the effects of market volatilities on Bank Polska 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 Bank Polska with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Polska and Banco Santander.
Diversification Opportunities for Bank Polska and Banco Santander
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Banco is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa 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 Bank Polska 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 Bank Polska Kasa 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 Bank Polska i.e., Bank Polska and Banco Santander go up and down completely randomly.
Pair Corralation between Bank Polska and Banco Santander
Assuming the 90 days trading horizon Bank Polska Kasa is expected to generate 1.19 times more return on investment than Banco Santander. However, Bank Polska is 1.19 times more volatile than Banco Santander SA. It trades about 0.07 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.06 per unit of risk. If you would invest 9,248 in Bank Polska Kasa on August 28, 2024 and sell it today you would earn a total of 4,827 from holding Bank Polska Kasa or generate 52.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.43% |
| Values | Daily Returns |
Bank Polska Kasa vs. Banco Santander SA
Performance |
| Timeline |
| Bank Polska Kasa |
| Banco Santander SA |
Bank Polska and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Polska and Banco Santander
The main advantage of trading using opposite Bank Polska and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Polska 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.The idea behind Bank Polska Kasa and Banco Santander SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Banco Santander vs. Igoria Trade SA | Banco Santander vs. Marie Brizard Wine | Banco Santander vs. Live Motion Games | Banco Santander vs. Pixel Crow Games |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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