Correlation Between Santander Bank and ED Invest
Can any of the company-specific risk be diversified away by investing in both Santander Bank and ED Invest 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 ED Invest 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 ED Invest SA, you can compare the effects of market volatilities on Santander Bank and ED Invest 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 ED Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and ED Invest.
Diversification Opportunities for Santander Bank and ED Invest
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Santander and EDI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and ED Invest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ED Invest 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 ED Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ED Invest SA has no effect on the direction of Santander Bank i.e., Santander Bank and ED Invest go up and down completely randomly.
Pair Corralation between Santander Bank and ED Invest
Assuming the 90 days trading horizon Santander Bank Polska is expected to generate 1.57 times more return on investment than ED Invest. However, Santander Bank is 1.57 times more volatile than ED Invest SA. It trades about 0.12 of its potential returns per unit of risk. ED Invest SA is currently generating about 0.1 per unit of risk. If you would invest 50,160 in Santander Bank Polska on November 30, 2024 and sell it today you would earn a total of 2,360 from holding Santander Bank Polska or generate 4.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Santander Bank Polska vs. ED Invest SA
Performance |
Timeline |
Santander Bank Polska |
ED Invest SA |
Santander Bank and ED Invest Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Santander Bank and ED Invest
The main advantage of trading using opposite Santander Bank and ED Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, ED Invest 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 ED Invest will offset losses from the drop in ED Invest's long position.Santander Bank vs. Ultimate Games 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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