Correlation Between Target Healthcare and SANTANDER
Can any of the company-specific risk be diversified away by investing in both Target Healthcare 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 Target Healthcare and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Healthcare REIT and SANTANDER UK 8, you can compare the effects of market volatilities on Target Healthcare 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 Target Healthcare with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Healthcare and SANTANDER.
Diversification Opportunities for Target Healthcare and SANTANDER
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Target and SANTANDER is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Target Healthcare REIT 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 Target Healthcare 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 Target Healthcare REIT 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 Target Healthcare i.e., Target Healthcare and SANTANDER go up and down completely randomly.
Pair Corralation between Target Healthcare and SANTANDER
Assuming the 90 days trading horizon Target Healthcare REIT is expected to under-perform the SANTANDER. In addition to that, Target Healthcare is 6.58 times more volatile than SANTANDER UK 8. It trades about -0.15 of its total potential returns per unit of risk. SANTANDER UK 8 is currently generating about -0.18 per unit of volatility. If you would invest 13,650 in SANTANDER UK 8 on September 4, 2024 and sell it today you would lose (100.00) from holding SANTANDER UK 8 or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Healthcare REIT vs. SANTANDER UK 8
Performance |
| Timeline |
| Target Healthcare REIT |
| SANTANDER UK 8 |
Target Healthcare and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Healthcare and SANTANDER
The main advantage of trading using opposite Target Healthcare and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Healthcare 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.| Target Healthcare vs. Hammerson PLC | Target Healthcare vs. Workspace Group PLC | Target Healthcare vs. Supermarket Income REIT | Target Healthcare vs. Reckitt Benckiser Group |
| SANTANDER vs. SupplyMe Capital PLC | SANTANDER vs. SM Energy Co | SANTANDER vs. FuelCell Energy | SANTANDER vs. Grand Vision Media |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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