Correlation Between Smithson Investment and SANTANDER
Can any of the company-specific risk be diversified away by investing in both Smithson Investment and SANTANDER 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 Smithson Investment and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and SANTANDER UK 8, you can compare the effects of market volatilities on Smithson Investment and SANTANDER 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 Smithson Investment with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and SANTANDER.
Diversification Opportunities for Smithson Investment and SANTANDER
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smithson and SANTANDER is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 and Smithson Investment 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 Smithson Investment Trust are associated (or correlated) with SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 8 has no effect on the direction of Smithson Investment i.e., Smithson Investment and SANTANDER go up and down completely randomly.
Pair Corralation between Smithson Investment and SANTANDER
Assuming the 90 days trading horizon Smithson Investment is expected to generate 1.39 times less return on investment than SANTANDER. In addition to that, Smithson Investment is 1.63 times more volatile than SANTANDER UK 8. It trades about 0.02 of its total potential returns per unit of risk. SANTANDER UK 8 is currently generating about 0.05 per unit of volatility. If you would invest 11,289 in SANTANDER UK 8 on November 5, 2024 and sell it today you would earn a total of 2,011 from holding SANTANDER UK 8 or generate 17.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Smithson Investment Trust vs. SANTANDER UK 8
Performance |
| Timeline |
| Smithson Investment Trust |
| SANTANDER UK 8 |
Smithson Investment and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and SANTANDER
The main advantage of trading using opposite Smithson Investment and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment position performs unexpectedly, SANTANDER 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 SANTANDER will offset losses from the drop in SANTANDER's long position.| Smithson Investment vs. Spotify Technology SA | Smithson Investment vs. Zegona Communications Plc | Smithson Investment vs. Software Circle plc | Smithson Investment vs. Bytes Technology |
| SANTANDER vs. Morgan Advanced Materials | SANTANDER vs. Rheinmetall AG | SANTANDER vs. Summit Materials Cl | SANTANDER vs. British American Tobacco |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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