Correlation Between ATT and Banco Santander
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Banco Santander SA, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Banco Santander.
Diversification Opportunities for ATT and Banco Santander
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between ATT and Banco is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc 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 ATT 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 ATT Inc 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 ATT i.e., ATT and Banco Santander go up and down completely randomly.
Pair Corralation between ATT and Banco Santander
Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Banco Santander. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.73 times less risky than Banco Santander. The stock trades about -0.25 of its potential returns per unit of risk. The Banco Santander SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 449.00 in Banco Santander SA on January 19, 2024 and sell it today you would earn a total of 26.00 from holding Banco Santander SA or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Banco Santander SA
Performance |
| Timeline |
| ATT Inc |
| Banco Santander SA |
ATT and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Banco Santander
The main advantage of trading using opposite ATT and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.The idea behind ATT Inc and Banco Santander SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC | Banco Santander vs. Natwest Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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