Correlation Between SANTANDER and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Aeorema Communications 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 Aeorema Communications 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 Aeorema Communications Plc, you can compare the effects of market volatilities on SANTANDER and Aeorema Communications 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 Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Aeorema Communications.
Diversification Opportunities for SANTANDER and Aeorema Communications
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SANTANDER and Aeorema is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications 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 Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of SANTANDER i.e., SANTANDER and Aeorema Communications go up and down completely randomly.
Pair Corralation between SANTANDER and Aeorema Communications
Assuming the 90 days trading horizon SANTANDER UK 10 is expected to generate 0.15 times more return on investment than Aeorema Communications. However, SANTANDER UK 10 is 6.55 times less risky than Aeorema Communications. It trades about 0.17 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about -0.19 per unit of risk. If you would invest 15,560 in SANTANDER UK 10 on December 5, 2024 and sell it today you would earn a total of 240.00 from holding SANTANDER UK 10 or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
SANTANDER UK 10 vs. Aeorema Communications Plc
Performance |
| Timeline |
| SANTANDER UK 10 |
| Aeorema Communications |
SANTANDER and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Aeorema Communications
The main advantage of trading using opposite SANTANDER and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| SANTANDER vs. Ruffer Investment | SANTANDER vs. Jade Road Investments | SANTANDER vs. Smithson Investment Trust | SANTANDER vs. Scottish American Investment |
| Aeorema Communications vs. Baker Steel Resources | Aeorema Communications vs. Morgan Advanced Materials | Aeorema Communications vs. Darden Restaurants | Aeorema Communications vs. Cornish Metals |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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