Correlation Between SANTANDER and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on SANTANDER and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Litigation Capital.
Diversification Opportunities for SANTANDER and Litigation Capital
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between SANTANDER and Litigation is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of SANTANDER i.e., SANTANDER and Litigation Capital go up and down completely randomly.
Pair Corralation between SANTANDER and Litigation Capital
Assuming the 90 days trading horizon SANTANDER is expected to generate 2.99 times less return on investment than Litigation Capital. But when comparing it to its historical volatility, SANTANDER UK 8 is 3.17 times less risky than Litigation Capital. It trades about 0.07 of its potential returns per unit of risk. Litigation Capital Management is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,247 in Litigation Capital Management on September 5, 2024 and sell it today you would earn a total of 5,578 from holding Litigation Capital Management or generate 89.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SANTANDER UK 8 vs. Litigation Capital Management
Performance |
| Timeline |
| SANTANDER UK 8 |
| Litigation Capital |
SANTANDER and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Litigation Capital
The main advantage of trading using opposite SANTANDER and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| SANTANDER vs. SupplyMe Capital PLC | SANTANDER vs. SM Energy Co | SANTANDER vs. FuelCell Energy | SANTANDER vs. Grand Vision Media |
| Litigation Capital vs. SupplyMe Capital PLC | Litigation Capital vs. Lloyds Banking Group | Litigation Capital vs. Premier African Minerals | Litigation Capital 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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