Correlation Between SANTANDER and Fidelity China
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Fidelity China 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 Fidelity China 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 Fidelity China Special, you can compare the effects of market volatilities on SANTANDER and Fidelity China 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 Fidelity China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Fidelity China.
Diversification Opportunities for SANTANDER and Fidelity China
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SANTANDER and Fidelity is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 and Fidelity China Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity China Special 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 Fidelity China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity China Special has no effect on the direction of SANTANDER i.e., SANTANDER and Fidelity China go up and down completely randomly.
Pair Corralation between SANTANDER and Fidelity China
Assuming the 90 days trading horizon SANTANDER UK 8 is expected to generate 0.49 times more return on investment than Fidelity China. However, SANTANDER UK 8 is 2.05 times less risky than Fidelity China. It trades about 0.07 of its potential returns per unit of risk. Fidelity China Special is currently generating about 0.0 per unit of risk. If you would invest 10,589 in SANTANDER UK 8 on September 5, 2024 and sell it today you would earn a total of 2,961 from holding SANTANDER UK 8 or generate 27.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
SANTANDER UK 8 vs. Fidelity China Special
Performance |
| Timeline |
| SANTANDER UK 8 |
| Fidelity China Special |
SANTANDER and Fidelity China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Fidelity China
The main advantage of trading using opposite SANTANDER and Fidelity China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Fidelity China 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 Fidelity China will offset losses from the drop in Fidelity China's long position.| SANTANDER vs. SupplyMe Capital PLC | SANTANDER vs. SM Energy Co | SANTANDER vs. FuelCell Energy | SANTANDER vs. Grand Vision Media |
| Fidelity China vs. SupplyMe Capital PLC | Fidelity China vs. Lloyds Banking Group | Fidelity China vs. Premier African Minerals | Fidelity China 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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