Correlation Between Banco Santander and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both Banco Santander and UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA, you can compare the effects of market volatilities on Banco Santander and UniCredit SpA 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 UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and UniCredit SpA.
Diversification Opportunities for Banco Santander and UniCredit SpA
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and UniCredit is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of Banco Santander i.e., Banco Santander and UniCredit SpA go up and down completely randomly.
Pair Corralation between Banco Santander and UniCredit SpA
Assuming the 90 days trading horizon Banco Santander SA is expected to under-perform the UniCredit SpA. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander SA is 1.33 times less risky than UniCredit SpA. The stock trades about -0.1 of its potential returns per unit of risk. The UniCredit SpA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 16,998 in UniCredit SpA on August 24, 2024 and sell it today you would lose (618.00) from holding UniCredit SpA or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Banco Santander SA vs. UniCredit SpA
Performance |
| Timeline |
| Banco Santander SA |
| UniCredit SpA |
Banco Santander and UniCredit SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and UniCredit SpA
The main advantage of trading using opposite Banco Santander and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.| Banco Santander vs. Pixel Crow Games | Banco Santander vs. TEN SQUARE GAMES | Banco Santander vs. Gaming Factory SA | Banco Santander vs. 3R Games SA |
| UniCredit SpA vs. Detalion Games SA | UniCredit SpA vs. TEN SQUARE GAMES | UniCredit SpA vs. PLAYWAY SA | UniCredit SpA vs. Gamedust 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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