Correlation Between Banco Santander and MicroSectorsTM Oil
Can any of the company-specific risk be diversified away by investing in both Banco Santander and MicroSectorsTM Oil 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 Banco Santander and MicroSectorsTM Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander SA and MicroSectorsTM Oil Gas, you can compare the effects of market volatilities on Banco Santander and MicroSectorsTM Oil 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 Banco Santander with a short position of MicroSectorsTM Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and MicroSectorsTM Oil.
Diversification Opportunities for Banco Santander and MicroSectorsTM Oil
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and MicroSectorsTM is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and MicroSectorsTM Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectorsTM Oil Gas and Banco Santander 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 Banco Santander SA are associated (or correlated) with MicroSectorsTM Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectorsTM Oil Gas has no effect on the direction of Banco Santander i.e., Banco Santander and MicroSectorsTM Oil go up and down completely randomly.
Pair Corralation between Banco Santander and MicroSectorsTM Oil
Considering the 90-day investment horizon Banco Santander SA is expected to generate 0.6 times more return on investment than MicroSectorsTM Oil. However, Banco Santander SA is 1.67 times less risky than MicroSectorsTM Oil. It trades about 0.15 of its potential returns per unit of risk. MicroSectorsTM Oil Gas is currently generating about -0.08 per unit of risk. If you would invest 455.00 in Banco Santander SA on January 20, 2024 and sell it today you would earn a total of 20.00 from holding Banco Santander SA or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander SA vs. MicroSectorsTM Oil Gas
Performance |
| Timeline |
| Banco Santander SA |
| MicroSectorsTM Oil Gas |
Banco Santander and MicroSectorsTM Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and MicroSectorsTM Oil
The main advantage of trading using opposite Banco Santander and MicroSectorsTM Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, MicroSectorsTM Oil 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 MicroSectorsTM Oil will offset losses from the drop in MicroSectorsTM Oil's long position.| Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC | Banco Santander vs. Natwest Group PLC |
| MicroSectorsTM Oil vs. ProShares Ultra SP500 | MicroSectorsTM Oil vs. HUMANA INC | MicroSectorsTM Oil vs. Aquagold International | MicroSectorsTM Oil vs. Thrivent High Yield |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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