Correlation Between Santander Bank and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both Santander Bank and UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA, you can compare the effects of market volatilities on Santander Bank and UniCredit SpA 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 UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and UniCredit SpA.
Diversification Opportunities for Santander Bank and UniCredit SpA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Santander and UniCredit is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of Santander Bank i.e., Santander Bank and UniCredit SpA go up and down completely randomly.
Pair Corralation between Santander Bank and UniCredit SpA
Assuming the 90 days trading horizon Santander Bank is expected to generate 1.66 times less return on investment than UniCredit SpA. But when comparing it to its historical volatility, Santander Bank Polska is 1.26 times less risky than UniCredit SpA. It trades about 0.39 of its potential returns per unit of risk. UniCredit SpA is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 16,120 in UniCredit SpA on November 3, 2024 and sell it today you would earn a total of 2,628 from holding UniCredit SpA or generate 16.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Santander Bank Polska vs. UniCredit SpA
Performance |
| Timeline |
| Santander Bank Polska |
| UniCredit SpA |
Santander Bank and UniCredit SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santander Bank and UniCredit SpA
The main advantage of trading using opposite Santander Bank and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santander Bank position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.| Santander Bank vs. UniCredit SpA | Santander Bank vs. Bank Polska Kasa | Santander Bank vs. ING Bank lski | Santander Bank vs. mBank SA |
| UniCredit SpA vs. Santander Bank Polska | UniCredit SpA vs. Bank Polska Kasa | UniCredit SpA vs. ING Bank lski | UniCredit SpA vs. mBank 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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