Correlation Between VRG SA and Banco Santander
Can any of the company-specific risk be diversified away by investing in both VRG SA 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 VRG SA and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VRG SA and Banco Santander SA, you can compare the effects of market volatilities on VRG SA 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 VRG SA with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of VRG SA and Banco Santander.
Diversification Opportunities for VRG SA and Banco Santander
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VRG and Banco is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding VRG SA 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 VRG SA 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 VRG SA 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 VRG SA i.e., VRG SA and Banco Santander go up and down completely randomly.
Pair Corralation between VRG SA and Banco Santander
Assuming the 90 days trading horizon VRG SA is expected to generate 0.96 times more return on investment than Banco Santander. However, VRG SA is 1.04 times less risky than Banco Santander. It trades about -0.01 of its potential returns per unit of risk. Banco Santander SA is currently generating about -0.02 per unit of risk. If you would invest 337.00 in VRG SA on September 3, 2024 and sell it today you would lose (12.00) from holding VRG SA or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VRG SA vs. Banco Santander SA
Performance |
| Timeline |
| VRG SA |
| Banco Santander SA |
VRG SA and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VRG SA and Banco Santander
The main advantage of trading using opposite VRG SA and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VRG SA 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.| VRG SA vs. Banco Santander SA | VRG SA vs. UniCredit SpA | VRG SA vs. CEZ as | VRG SA vs. Polski Koncern Naftowy |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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