Correlation Between SANTANDER and Mereo BioPharma
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Mereo BioPharma 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 SANTANDER and Mereo BioPharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SANTANDER UK 10 and Mereo BioPharma Group, you can compare the effects of market volatilities on SANTANDER and Mereo BioPharma 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 SANTANDER with a short position of Mereo BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Mereo BioPharma.
Diversification Opportunities for SANTANDER and Mereo BioPharma
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SANTANDER and Mereo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Mereo BioPharma Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mereo BioPharma Group and SANTANDER 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 SANTANDER UK 10 are associated (or correlated) with Mereo BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mereo BioPharma Group has no effect on the direction of SANTANDER i.e., SANTANDER and Mereo BioPharma go up and down completely randomly.
Pair Corralation between SANTANDER and Mereo BioPharma
Assuming the 90 days trading horizon SANTANDER is expected to generate 7.65 times less return on investment than Mereo BioPharma. But when comparing it to its historical volatility, SANTANDER UK 10 is 5.85 times less risky than Mereo BioPharma. It trades about 0.06 of its potential returns per unit of risk. Mereo BioPharma Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 79.00 in Mereo BioPharma Group on September 1, 2024 and sell it today you would earn a total of 276.00 from holding Mereo BioPharma Group or generate 349.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.38% |
| Values | Daily Returns |
SANTANDER UK 10 vs. Mereo BioPharma Group
Performance |
| Timeline |
| SANTANDER UK 10 |
| Mereo BioPharma Group |
SANTANDER and Mereo BioPharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Mereo BioPharma
The main advantage of trading using opposite SANTANDER and Mereo BioPharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Mereo BioPharma 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 Mereo BioPharma will offset losses from the drop in Mereo BioPharma's long position.| SANTANDER vs. Pentair PLC | SANTANDER vs. Batm Advanced Communications | SANTANDER vs. Systemair AB | SANTANDER vs. Science in Sport |
| Mereo BioPharma vs. Uniper SE | Mereo BioPharma vs. Mulberry Group PLC | Mereo BioPharma vs. London Security Plc | Mereo BioPharma vs. Triad Group PLC |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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