Correlation Between SANTANDER and IShares Dow
Can any of the company-specific risk be diversified away by investing in both SANTANDER and IShares Dow 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 IShares Dow 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 iShares Dow Jones, you can compare the effects of market volatilities on SANTANDER and IShares Dow 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 IShares Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and IShares Dow.
Diversification Opportunities for SANTANDER and IShares Dow
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SANTANDER and IShares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and iShares Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dow Jones 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 IShares Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dow Jones has no effect on the direction of SANTANDER i.e., SANTANDER and IShares Dow go up and down completely randomly.
Pair Corralation between SANTANDER and IShares Dow
Assuming the 90 days trading horizon SANTANDER UK 10 is expected to under-perform the IShares Dow. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 10 is 5.97 times less risky than IShares Dow. The stock trades about -0.03 of its potential returns per unit of risk. The iShares Dow Jones is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,364 in iShares Dow Jones on September 1, 2024 and sell it today you would earn a total of 142.00 from holding iShares Dow Jones or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SANTANDER UK 10 vs. iShares Dow Jones
Performance |
| Timeline |
| SANTANDER UK 10 |
| iShares Dow Jones |
SANTANDER and IShares Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and IShares Dow
The main advantage of trading using opposite SANTANDER and IShares Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, IShares Dow 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 IShares Dow will offset losses from the drop in IShares Dow's long position.| SANTANDER vs. Pentair PLC | SANTANDER vs. Batm Advanced Communications | SANTANDER vs. Systemair AB | SANTANDER vs. Science in Sport |
| IShares Dow vs. Vanguard FTSE Developed | IShares Dow vs. Leverage Shares 2x | IShares Dow vs. Amundi Index Solutions | IShares Dow vs. Amundi Index Solutions |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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