Correlation Between Banco Santander and TLT
Can any of the company-specific risk be diversified away by investing in both Banco Santander and TLT 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 TLT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander SA and TLT, you can compare the effects of market volatilities on Banco Santander and TLT 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 TLT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and TLT.
Diversification Opportunities for Banco Santander and TLT
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Banco and TLT is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and TLT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLT 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 SA are associated (or correlated) with TLT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLT has no effect on the direction of Banco Santander i.e., Banco Santander and TLT go up and down completely randomly.
Pair Corralation between Banco Santander and TLT
Assuming the 90 days trading horizon Banco Santander SA is expected to under-perform the TLT. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander SA is 4.85 times less risky than TLT. The stock trades about -0.02 of its potential returns per unit of risk. The TLT is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15.00 in TLT on September 1, 2024 and sell it today you would lose (1.00) from holding TLT or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.25% |
| Values | Daily Returns |
Banco Santander SA vs. TLT
Performance |
| Timeline |
| Banco Santander SA |
| TLT |
Banco Santander and TLT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and TLT
The main advantage of trading using opposite Banco Santander and TLT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, TLT 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 TLT will offset losses from the drop in TLT's long position.| Banco Santander vs. Quantum Software SA | Banco Santander vs. New Tech Venture | Banco Santander vs. Enter Air SA | Banco Santander vs. BNP Paribas Bank |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Stocks Directory Find actively traded stocks across global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |