Correlation Between Invesco Health and SANTANDER
Can any of the company-specific risk be diversified away by investing in both Invesco Health 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 Invesco Health and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Health Care and SANTANDER UK 10, you can compare the effects of market volatilities on Invesco Health 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 Invesco Health with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Health and SANTANDER.
Diversification Opportunities for Invesco Health and SANTANDER
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and SANTANDER is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Health Care 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 Invesco Health 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 Invesco Health Care 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 Invesco Health i.e., Invesco Health and SANTANDER go up and down completely randomly.
Pair Corralation between Invesco Health and SANTANDER
Assuming the 90 days trading horizon Invesco Health is expected to generate 2.76 times less return on investment than SANTANDER. But when comparing it to its historical volatility, Invesco Health Care is 1.46 times less risky than SANTANDER. It trades about 0.03 of its potential returns per unit of risk. SANTANDER UK 10 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11,943 in SANTANDER UK 10 on September 4, 2024 and sell it today you would earn a total of 3,927 from holding SANTANDER UK 10 or generate 32.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Health Care vs. SANTANDER UK 10
Performance |
| Timeline |
| Invesco Health Care |
| SANTANDER UK 10 |
Invesco Health and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Health and SANTANDER
The main advantage of trading using opposite Invesco Health and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Health 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.| Invesco Health vs. Invesco MSCI Emerging | Invesco Health vs. Invesco EURO STOXX | Invesco Health vs. Invesco Markets Plc | Invesco Health vs. Invesco FTSE RAFI |
| SANTANDER vs. Metals Exploration Plc | SANTANDER vs. Bell Food Group | SANTANDER vs. AMG Advanced Metallurgical | SANTANDER vs. Bisichi Mining 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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