Correlation Between SANTANDER and First Trust
Can any of the company-specific risk be diversified away by investing in both SANTANDER and First Trust 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 First Trust 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 First Trust Nasdaq, you can compare the effects of market volatilities on SANTANDER and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and First Trust.
Diversification Opportunities for SANTANDER and First Trust
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SANTANDER and First is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of SANTANDER i.e., SANTANDER and First Trust go up and down completely randomly.
Pair Corralation between SANTANDER and First Trust
Assuming the 90 days trading horizon SANTANDER UK 10 is expected to generate 0.44 times more return on investment than First Trust. However, SANTANDER UK 10 is 2.3 times less risky than First Trust. It trades about 0.06 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about -0.03 per unit of risk. If you would invest 11,740 in SANTANDER UK 10 on August 28, 2024 and sell it today you would earn a total of 3,915 from holding SANTANDER UK 10 or generate 33.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANTANDER UK 10 vs. First Trust Nasdaq
Performance |
| Timeline |
| SANTANDER UK 10 |
| First Trust Nasdaq |
SANTANDER and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and First Trust
The main advantage of trading using opposite SANTANDER and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| SANTANDER vs. Park Hotels Resorts | SANTANDER vs. Silvercorp Metals | SANTANDER vs. Endeavour Mining Corp | SANTANDER vs. Panther Metals PLC |
| First Trust vs. First Trust Large | First Trust vs. First Trust Capital | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Eurozone |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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