Correlation Between SANTANDER and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both SANTANDER and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on SANTANDER and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and XLMedia PLC.
Diversification Opportunities for SANTANDER and XLMedia PLC
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SANTANDER and XLMedia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of SANTANDER i.e., SANTANDER and XLMedia PLC go up and down completely randomly.
Pair Corralation between SANTANDER and XLMedia PLC
Assuming the 90 days trading horizon SANTANDER is expected to generate 1.05 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, SANTANDER UK 8 is 7.68 times less risky than XLMedia PLC. It trades about 0.07 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,675 in XLMedia PLC on August 29, 2024 and sell it today you would lose (480.00) from holding XLMedia PLC or give up 28.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANTANDER UK 8 vs. XLMedia PLC
Performance |
| Timeline |
| SANTANDER UK 8 |
| XLMedia PLC |
SANTANDER and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and XLMedia PLC
The main advantage of trading using opposite SANTANDER and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| SANTANDER vs. XLMedia PLC | SANTANDER vs. Centaur Media | SANTANDER vs. Intermediate Capital Group | SANTANDER vs. Verizon Communications |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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