Correlation Between Banco Santander and Enags SA
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Enags SA 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 Banco Santander and Enags SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander and Enags SA, you can compare the effects of market volatilities on Banco Santander and Enags SA 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 Banco Santander with a short position of Enags SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Enags SA.
Diversification Opportunities for Banco Santander and Enags SA
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and Enags is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander and Enags SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enags SA and Banco 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 Banco Santander are associated (or correlated) with Enags SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enags SA has no effect on the direction of Banco Santander i.e., Banco Santander and Enags SA go up and down completely randomly.
Pair Corralation between Banco Santander and Enags SA
Assuming the 90 days trading horizon Banco Santander is expected to generate 1.27 times more return on investment than Enags SA. However, Banco Santander is 1.27 times more volatile than Enags SA. It trades about 0.07 of its potential returns per unit of risk. Enags SA is currently generating about -0.03 per unit of risk. If you would invest 358.00 in Banco Santander on August 28, 2024 and sell it today you would earn a total of 86.00 from holding Banco Santander or generate 24.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.53% |
| Values | Daily Returns |
Banco Santander vs. Enags SA
Performance |
| Timeline |
| Banco Santander |
| Enags SA |
Banco Santander and Enags SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Enags SA
The main advantage of trading using opposite Banco Santander and Enags SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Enags SA 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 Enags SA will offset losses from the drop in Enags SA's long position.| Banco Santander vs. Repsol | Banco Santander vs. Iberdrola SA | Banco Santander vs. Banco de Sabadell | Banco Santander vs. Caixabank SA |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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