Correlation Between SANTANDER and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both SANTANDER and Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment, you can compare the effects of market volatilities on SANTANDER and Mercantile Investment 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 Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Mercantile Investment.
Diversification Opportunities for SANTANDER and Mercantile Investment
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SANTANDER and Mercantile is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment 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 Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of SANTANDER i.e., SANTANDER and Mercantile Investment go up and down completely randomly.
Pair Corralation between SANTANDER and Mercantile Investment
Assuming the 90 days trading horizon SANTANDER UK 8 is expected to under-perform the Mercantile Investment. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 8 is 4.81 times less risky than Mercantile Investment. The stock trades about -0.17 of its potential returns per unit of risk. The The Mercantile Investment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 23,500 in The Mercantile Investment on September 5, 2024 and sell it today you would earn a total of 350.00 from holding The Mercantile Investment or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANTANDER UK 8 vs. The Mercantile Investment
Performance |
| Timeline |
| SANTANDER UK 8 |
| The Mercantile Investment |
SANTANDER and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Mercantile Investment
The main advantage of trading using opposite SANTANDER and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| SANTANDER vs. SupplyMe Capital PLC | SANTANDER vs. SM Energy Co | SANTANDER vs. FuelCell Energy | SANTANDER vs. Grand Vision Media |
| Mercantile Investment vs. SupplyMe Capital PLC | Mercantile Investment vs. Lloyds Banking Group | Mercantile Investment vs. Premier African Minerals | Mercantile Investment 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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