Correlation Between Svenska Handelsbanken and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Banco 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 Svenska Handelsbanken and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Handelsbanken PK and Banco Santander SA, you can compare the effects of market volatilities on Svenska Handelsbanken and Banco 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 Svenska Handelsbanken with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Banco Santander.
Diversification Opportunities for Svenska Handelsbanken and Banco Santander
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Svenska and Banco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken PK and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and Svenska Handelsbanken 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 Svenska Handelsbanken PK are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Banco Santander go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Banco Santander
Assuming the 90 days horizon Svenska Handelsbanken is expected to generate 2.12 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Svenska Handelsbanken PK is 2.78 times less risky than Banco Santander. It trades about 0.42 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 485.00 in Banco Santander SA on November 18, 2024 and sell it today you would earn a total of 129.00 from holding Banco Santander SA or generate 26.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken PK vs. Banco Santander SA
Performance |
| Timeline |
| Svenska Handelsbanken |
| Banco Santander SA |
Svenska Handelsbanken and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Banco Santander
The main advantage of trading using opposite Svenska Handelsbanken and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Banco 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| Svenska Handelsbanken vs. China Construction Bank | Svenska Handelsbanken vs. Industrial and Commercial | Svenska Handelsbanken vs. Bank of America | Svenska Handelsbanken vs. Bank of America |
| Banco Santander vs. Banco Bilbao Viscaya | Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
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