Correlation Between Santander Bank and Bank Millennium
Can any of the company-specific risk be diversified away by investing in both Santander Bank and Bank Millennium 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 Bank Millennium 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 Bank Millennium SA, you can compare the effects of market volatilities on Santander Bank and Bank Millennium 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 Bank Millennium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and Bank Millennium.
Diversification Opportunities for Santander Bank and Bank Millennium
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Santander and Bank is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Bank Millennium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Millennium 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 Bank Millennium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Millennium SA has no effect on the direction of Santander Bank i.e., Santander Bank and Bank Millennium go up and down completely randomly.
Pair Corralation between Santander Bank and Bank Millennium
Assuming the 90 days trading horizon Santander Bank is expected to generate 1.75 times less return on investment than Bank Millennium. But when comparing it to its historical volatility, Santander Bank Polska is 1.21 times less risky than Bank Millennium. It trades about 0.05 of its potential returns per unit of risk. Bank Millennium SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 466.00 in Bank Millennium SA on August 27, 2024 and sell it today you would earn a total of 363.00 from holding Bank Millennium SA or generate 77.9% 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. Bank Millennium SA
Performance |
| Timeline |
| Santander Bank Polska |
| Bank Millennium SA |
Santander Bank and Bank Millennium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santander Bank and Bank Millennium
The main advantage of trading using opposite Santander Bank and Bank Millennium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, Bank Millennium 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 Bank Millennium will offset losses from the drop in Bank Millennium'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 |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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