Correlation Between SANTANDER and Trainline Plc
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Trainline Plc 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 Trainline Plc 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 Trainline Plc, you can compare the effects of market volatilities on SANTANDER and Trainline Plc 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 Trainline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Trainline Plc.
Diversification Opportunities for SANTANDER and Trainline Plc
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SANTANDER and Trainline is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of SANTANDER i.e., SANTANDER and Trainline Plc go up and down completely randomly.
Pair Corralation between SANTANDER and Trainline Plc
Assuming the 90 days trading horizon SANTANDER is expected to generate 3.22 times less return on investment than Trainline Plc. But when comparing it to its historical volatility, SANTANDER UK 10 is 5.61 times less risky than Trainline Plc. It trades about 0.16 of its potential returns per unit of risk. Trainline Plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 32,440 in Trainline Plc on September 3, 2024 and sell it today you would earn a total of 8,020 from holding Trainline Plc or generate 24.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
SANTANDER UK 10 vs. Trainline Plc
Performance |
| Timeline |
| SANTANDER UK 10 |
| Trainline Plc |
SANTANDER and Trainline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Trainline Plc
The main advantage of trading using opposite SANTANDER and Trainline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Trainline Plc 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 Trainline Plc will offset losses from the drop in Trainline Plc's long position.| SANTANDER vs. MediaZest plc | SANTANDER vs. Greenroc Mining PLC | SANTANDER vs. Blackrock World Mining | SANTANDER vs. One Media iP |
| Trainline Plc vs. GoldMining | Trainline Plc vs. Metals Exploration Plc | Trainline Plc vs. Panther Metals PLC | Trainline Plc vs. Endeavour Mining Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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