Correlation Between Santander Bank and Echo Investment
Can any of the company-specific risk be diversified away by investing in both Santander Bank and Echo 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 Bank and Echo Investment 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 Echo Investment SA, you can compare the effects of market volatilities on Santander Bank and Echo 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 Bank with a short position of Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and Echo Investment.
Diversification Opportunities for Santander Bank and Echo Investment
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Santander and Echo is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment 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 Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of Santander Bank i.e., Santander Bank and Echo Investment go up and down completely randomly.
Pair Corralation between Santander Bank and Echo Investment
Assuming the 90 days trading horizon Santander Bank Polska is expected to generate 1.68 times more return on investment than Echo Investment. However, Santander Bank is 1.68 times more volatile than Echo Investment SA. It trades about 0.0 of its potential returns per unit of risk. Echo Investment SA is currently generating about -0.04 per unit of risk. If you would invest 44,880 in Santander Bank Polska on August 28, 2024 and sell it today you would lose (320.00) from holding Santander Bank Polska or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santander Bank Polska vs. Echo Investment SA
Performance |
| Timeline |
| Santander Bank Polska |
| Echo Investment SA |
Santander Bank and Echo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santander Bank and Echo Investment
The main advantage of trading using opposite Santander Bank and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, Echo 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 Echo Investment will offset losses from the drop in Echo Investment's long position.| Santander Bank vs. GreenX Metals | Santander Bank vs. LSI Software SA | Santander Bank vs. UniCredit SpA | Santander Bank vs. Noble Financials SA |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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