Correlation Between SANTANDER and Software Circle
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Software Circle 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 Software Circle 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 Software Circle plc, you can compare the effects of market volatilities on SANTANDER and Software Circle 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 Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Software Circle.
Diversification Opportunities for SANTANDER and Software Circle
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between SANTANDER and Software is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle plc 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 Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of SANTANDER i.e., SANTANDER and Software Circle go up and down completely randomly.
Pair Corralation between SANTANDER and Software Circle
Assuming the 90 days trading horizon SANTANDER UK 10 is expected to under-perform the Software Circle. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 10 is 3.05 times less risky than Software Circle. The stock trades about -0.17 of its potential returns per unit of risk. The Software Circle plc is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Software Circle plc on October 23, 2024 and sell it today you would earn a total of 100.00 from holding Software Circle plc or generate 4.35% 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. Software Circle plc
Performance |
| Timeline |
| SANTANDER UK 10 |
| Software Circle plc |
SANTANDER and Software Circle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Software Circle
The main advantage of trading using opposite SANTANDER and Software Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Software Circle 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 Software Circle will offset losses from the drop in Software Circle's long position.| SANTANDER vs. Molson Coors Beverage | SANTANDER vs. Premier Foods PLC | SANTANDER vs. Samsung Electronics Co | SANTANDER vs. SBM Offshore NV |
| Software Circle vs. Restore plc | Software Circle vs. SANTANDER UK 10 | Software Circle vs. Coor Service Management | Software Circle vs. Franklin FTSE Brazil |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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