Correlation Between Santander Bank and Dom Development
Can any of the company-specific risk be diversified away by investing in both Santander Bank and Dom Development 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 Bank and Dom Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santander Bank Polska and Dom Development SA, you can compare the effects of market volatilities on Santander Bank and Dom Development 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 Bank with a short position of Dom Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and Dom Development.
Diversification Opportunities for Santander Bank and Dom Development
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Santander and Dom is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Dom Development SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dom Development SA and Santander Bank 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 Bank Polska are associated (or correlated) with Dom Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dom Development SA has no effect on the direction of Santander Bank i.e., Santander Bank and Dom Development go up and down completely randomly.
Pair Corralation between Santander Bank and Dom Development
Assuming the 90 days trading horizon Santander Bank is expected to generate 17.0 times less return on investment than Dom Development. But when comparing it to its historical volatility, Santander Bank Polska is 1.12 times less risky than Dom Development. It trades about 0.0 of its potential returns per unit of risk. Dom Development SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 15,451 in Dom Development SA on September 2, 2024 and sell it today you would earn a total of 4,249 from holding Dom Development SA or generate 27.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santander Bank Polska vs. Dom Development SA
Performance |
| Timeline |
| Santander Bank Polska |
| Dom Development SA |
Santander Bank and Dom Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santander Bank and Dom Development
The main advantage of trading using opposite Santander Bank and Dom Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, Dom Development 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 Dom Development will offset losses from the drop in Dom Development's long position.| Santander Bank vs. PZ Cormay SA | Santander Bank vs. MW Trade SA | Santander Bank vs. LSI Software SA | Santander Bank vs. Logintrade SA |
| Dom Development vs. PZ Cormay SA | Dom Development vs. Logintrade SA | Dom Development vs. MW Trade SA | Dom Development vs. Movie Games SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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