Correlation Between Santander Bank and TLT
Can any of the company-specific risk be diversified away by investing in both Santander Bank and TLT 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 TLT 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 TLT, you can compare the effects of market volatilities on Santander Bank and TLT 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 TLT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and TLT.
Diversification Opportunities for Santander Bank and TLT
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Santander and TLT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and TLT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLT 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 TLT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLT has no effect on the direction of Santander Bank i.e., Santander Bank and TLT go up and down completely randomly.
Pair Corralation between Santander Bank and TLT
Assuming the 90 days trading horizon Santander Bank Polska is expected to generate 0.24 times more return on investment than TLT. However, Santander Bank Polska is 4.15 times less risky than TLT. It trades about 0.08 of its potential returns per unit of risk. TLT is currently generating about 0.0 per unit of risk. If you would invest 22,707 in Santander Bank Polska on August 30, 2024 and sell it today you would earn a total of 21,073 from holding Santander Bank Polska or generate 92.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.51% |
| Values | Daily Returns |
Santander Bank Polska vs. TLT
Performance |
| Timeline |
| Santander Bank Polska |
| TLT |
Santander Bank and TLT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santander Bank and TLT
The main advantage of trading using opposite Santander Bank and TLT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, TLT 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 TLT will offset losses from the drop in TLT's long position.| Santander Bank vs. mBank SA | Santander Bank vs. UF Games SA | Santander Bank vs. Echo Investment SA | Santander Bank vs. Gaming Factory 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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