Correlation Between SANTANDER and Neometals
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on SANTANDER and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Neometals.
Diversification Opportunities for SANTANDER and Neometals
Average diversification
The 3 months correlation between SANTANDER and Neometals is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of SANTANDER i.e., SANTANDER and Neometals go up and down completely randomly.
Pair Corralation between SANTANDER and Neometals
Assuming the 90 days trading horizon SANTANDER UK 10 is expected to generate 0.25 times more return on investment than Neometals. However, SANTANDER UK 10 is 4.08 times less risky than Neometals. It trades about 0.06 of its potential returns per unit of risk. Neometals is currently generating about -0.1 per unit of risk. If you would invest 11,943 in SANTANDER UK 10 on September 4, 2024 and sell it today you would earn a total of 3,927 from holding SANTANDER UK 10 or generate 32.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANTANDER UK 10 vs. Neometals
Performance |
| Timeline |
| SANTANDER UK 10 |
| Neometals |
SANTANDER and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Neometals
The main advantage of trading using opposite SANTANDER and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| SANTANDER vs. Metals Exploration Plc | SANTANDER vs. Bell Food Group | SANTANDER vs. AMG Advanced Metallurgical | SANTANDER vs. Bisichi Mining PLC |
| Neometals vs. Flowtech Fluidpower plc | Neometals vs. Allianz Technology Trust | Neometals vs. TR Property Investment | Neometals vs. FC Investment Trust |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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