Correlation Between PureTech Health and SANTANDER
Can any of the company-specific risk be diversified away by investing in both PureTech Health and 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 PureTech Health and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and SANTANDER UK 8, you can compare the effects of market volatilities on PureTech Health and 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 PureTech Health with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and SANTANDER.
Diversification Opportunities for PureTech Health and SANTANDER
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between PureTech and SANTANDER is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 and PureTech Health 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 PureTech Health plc are associated (or correlated) with SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 8 has no effect on the direction of PureTech Health i.e., PureTech Health and SANTANDER go up and down completely randomly.
Pair Corralation between PureTech Health and SANTANDER
Assuming the 90 days trading horizon PureTech Health plc is expected to generate 2.74 times more return on investment than SANTANDER. However, PureTech Health is 2.74 times more volatile than SANTANDER UK 8. It trades about 0.04 of its potential returns per unit of risk. SANTANDER UK 8 is currently generating about 0.06 per unit of risk. If you would invest 14,040 in PureTech Health plc on September 3, 2024 and sell it today you would earn a total of 2,700 from holding PureTech Health plc or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PureTech Health plc vs. SANTANDER UK 8
Performance |
| Timeline |
| PureTech Health plc |
| SANTANDER UK 8 |
PureTech Health and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and SANTANDER
The main advantage of trading using opposite PureTech Health and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health position performs unexpectedly, 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 SANTANDER will offset losses from the drop in SANTANDER's long position.| PureTech Health vs. Walmart | PureTech Health vs. Volkswagen AG | PureTech Health vs. Deutsche Post AG | PureTech Health vs. United Parcel Service |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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