Correlation Between Visa and SANTANDER
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and SANTANDER UK 10, you can compare the effects of market volatilities on Visa 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 Visa with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SANTANDER.
Diversification Opportunities for Visa and SANTANDER
Very weak diversification
The 3 months correlation between Visa and SANTANDER is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SANTANDER UK 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 10 and Visa 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 Visa Class A 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 10 has no effect on the direction of Visa i.e., Visa and SANTANDER go up and down completely randomly.
Pair Corralation between Visa and SANTANDER
Taking into account the 90-day investment horizon Visa Class A is expected to generate 13.1 times more return on investment than SANTANDER. However, Visa is 13.1 times more volatile than SANTANDER UK 10. It trades about 0.37 of its potential returns per unit of risk. SANTANDER UK 10 is currently generating about 0.02 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. SANTANDER UK 10
Performance |
| Timeline |
| Visa Class A |
| SANTANDER UK 10 |
Visa and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SANTANDER
The main advantage of trading using opposite Visa and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| SANTANDER vs. Park Hotels Resorts | SANTANDER vs. Silvercorp Metals | SANTANDER vs. Endeavour Mining Corp | SANTANDER vs. Panther Metals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |