Correlation Between SANTANDER and SPDR SP
Can any of the company-specific risk be diversified away by investing in both SANTANDER and SPDR SP 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 SPDR SP 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 SPDR SP Materials, you can compare the effects of market volatilities on SANTANDER and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and SPDR SP.
Diversification Opportunities for SANTANDER and SPDR SP
Good diversification
The 3 months correlation between SANTANDER and SPDR is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and SPDR SP Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Materials 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Materials has no effect on the direction of SANTANDER i.e., SANTANDER and SPDR SP go up and down completely randomly.
Pair Corralation between SANTANDER and SPDR SP
Assuming the 90 days trading horizon SANTANDER UK 10 is expected to generate about the same return on investment as SPDR SP Materials. But, SANTANDER UK 10 is 1.07 times less risky than SPDR SP. It trades about 0.09 of its potential returns per unit of risk. SPDR SP Materials is currently generating about 0.08 per unit of risk. If you would invest 3,909 in SPDR SP Materials on September 2, 2024 and sell it today you would earn a total of 702.00 from holding SPDR SP Materials or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
SANTANDER UK 10 vs. SPDR SP Materials
Performance |
| Timeline |
| SANTANDER UK 10 |
| SPDR SP Materials |
SANTANDER and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and SPDR SP
The main advantage of trading using opposite SANTANDER and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| SANTANDER vs. United States Steel | SANTANDER vs. JLEN Environmental Assets | SANTANDER vs. Raytheon Technologies Corp | SANTANDER vs. Allianz Technology Trust |
| SPDR SP vs. SPDR Dow Jones | SPDR SP vs. SPDR SP Dividend | SPDR SP vs. SPDR Barclays Euro | SPDR SP vs. SPDR SP Consumer |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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