Correlation Between SANTANDER and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Alfa Financial 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 Alfa Financial 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 Alfa Financial Software, you can compare the effects of market volatilities on SANTANDER and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Alfa Financial.
Diversification Opportunities for SANTANDER and Alfa Financial
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between SANTANDER and Alfa is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of SANTANDER i.e., SANTANDER and Alfa Financial go up and down completely randomly.
Pair Corralation between SANTANDER and Alfa Financial
Assuming the 90 days trading horizon SANTANDER UK 8 is expected to under-perform the Alfa Financial. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 8 is 10.95 times less risky than Alfa Financial. The stock trades about -0.08 of its potential returns per unit of risk. The Alfa Financial Software is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 21,350 in Alfa Financial Software on September 1, 2024 and sell it today you would earn a total of 700.00 from holding Alfa Financial Software or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANTANDER UK 8 vs. Alfa Financial Software
Performance |
| Timeline |
| SANTANDER UK 8 |
| Alfa Financial Software |
SANTANDER and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Alfa Financial
The main advantage of trading using opposite SANTANDER and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| SANTANDER vs. Auction Technology Group | SANTANDER vs. Hochschild Mining plc | SANTANDER vs. Vitec Software Group | SANTANDER vs. Blackrock World Mining |
| Alfa Financial vs. SupplyMe Capital PLC | Alfa Financial vs. Lloyds Banking Group | Alfa Financial vs. Premier African Minerals | Alfa Financial vs. SANTANDER UK 8 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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