Correlation Between SANTANDER and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Ashtead Group 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 Ashtead Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SANTANDER UK 8 and Ashtead Group PLC, you can compare the effects of market volatilities on SANTANDER and Ashtead Group 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 Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Ashtead Group.
Diversification Opportunities for SANTANDER and Ashtead Group
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between SANTANDER and Ashtead is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 and Ashtead Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group 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 8 are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group PLC has no effect on the direction of SANTANDER i.e., SANTANDER and Ashtead Group go up and down completely randomly.
Pair Corralation between SANTANDER and Ashtead Group
Assuming the 90 days trading horizon SANTANDER UK 8 is expected to under-perform the Ashtead Group. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 8 is 4.86 times less risky than Ashtead Group. The stock trades about -0.48 of its potential returns per unit of risk. The Ashtead Group PLC is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 491,204 in Ashtead Group PLC on October 25, 2024 and sell it today you would earn a total of 55,396 from holding Ashtead Group PLC or generate 11.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
SANTANDER UK 8 vs. Ashtead Group PLC
Performance |
| Timeline |
| SANTANDER UK 8 |
| Ashtead Group PLC |
SANTANDER and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Ashtead Group
The main advantage of trading using opposite SANTANDER and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| SANTANDER vs. mobilezone holding AG | SANTANDER vs. Martin Marietta Materials | SANTANDER vs. Verizon Communications | SANTANDER vs. Bloomsbury Publishing Plc |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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