Correlation Between Banco Santander and Realia
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Realia 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 Realia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander and Realia, you can compare the effects of market volatilities on Banco Santander and Realia 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 Realia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Realia.
Diversification Opportunities for Banco Santander and Realia
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and Realia is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander and Realia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realia 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 Realia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realia has no effect on the direction of Banco Santander i.e., Banco Santander and Realia go up and down completely randomly.
Pair Corralation between Banco Santander and Realia
Assuming the 90 days trading horizon Banco Santander is expected to generate 2.44 times less return on investment than Realia. In addition to that, Banco Santander is 2.39 times more volatile than Realia. It trades about 0.02 of its total potential returns per unit of risk. Realia is currently generating about 0.11 per unit of volatility. If you would invest 98.00 in Realia on August 24, 2024 and sell it today you would earn a total of 2.00 from holding Realia or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander vs. Realia
Performance |
| Timeline |
| Banco Santander |
| Realia |
Banco Santander and Realia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Realia
The main advantage of trading using opposite Banco Santander and Realia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Realia 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 Realia will offset losses from the drop in Realia's long position.| Banco Santander vs. Repsol | Banco Santander vs. Iberdrola SA | Banco Santander vs. Banco de Sabadell | Banco Santander vs. Caixabank SA |
| Realia vs. Banco Santander | Realia vs. Banco Bilbao Vizcaya | Realia vs. Caixabank SA | Realia vs. Banco de Sabadell |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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