Correlation Between SANTANDER and Auction Technology
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Auction Technology 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 Auction Technology 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 Auction Technology Group, you can compare the effects of market volatilities on SANTANDER and Auction Technology 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 Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Auction Technology.
Diversification Opportunities for SANTANDER and Auction Technology
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SANTANDER and Auction is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology 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 Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of SANTANDER i.e., SANTANDER and Auction Technology go up and down completely randomly.
Pair Corralation between SANTANDER and Auction Technology
Assuming the 90 days trading horizon SANTANDER UK 8 is expected to under-perform the Auction Technology. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 8 is 19.25 times less risky than Auction Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Auction Technology Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 45,050 in Auction Technology Group on September 1, 2024 and sell it today you would earn a total of 6,550 from holding Auction Technology Group or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANTANDER UK 8 vs. Auction Technology Group
Performance |
| Timeline |
| SANTANDER UK 8 |
| Auction Technology |
SANTANDER and Auction Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Auction Technology
The main advantage of trading using opposite SANTANDER and Auction Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Auction Technology 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 Auction Technology will offset losses from the drop in Auction Technology's long position.| SANTANDER vs. Auction Technology Group | SANTANDER vs. Hochschild Mining plc | SANTANDER vs. Vitec Software Group | SANTANDER vs. Blackrock World Mining |
| Auction Technology vs. SupplyMe Capital PLC | Auction Technology vs. Lloyds Banking Group | Auction Technology vs. Premier African Minerals | Auction Technology 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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