Correlation Between SM Energy and SANTANDER

Can any of the company-specific risk be diversified away by investing in both SM Energy 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 SM Energy and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SM Energy Co and SANTANDER UK 8, you can compare the effects of market volatilities on SM Energy 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 SM Energy with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and SANTANDER.

Diversification Opportunities for SM Energy and SANTANDER

-0.74

Correlation Coefficient

SM Energy  SANTANDER

Pay attention - limited upside

The 3 months correlation between 0KZA and SANTANDER is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 and SM Energy 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 SM Energy Co 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 8 has no effect on the direction of SM Energy i.e., SM Energy and SANTANDER go up and down completely randomly.

Pair Corralation between SM Energy and SANTANDER

Assuming the 90 days trading horizon SM Energy Co is expected to under-perform the SANTANDER. In addition to that, SM Energy is 7.17 times more volatile than SANTANDER UK 8. It trades about -0.14 of its total potential returns per unit of risk. SANTANDER UK 8 is currently generating about 0.16 per unit of volatility. If you would invest  13,170  in SANTANDER UK 8 on December 29, 2024 and sell it today you would earn a total of  530.00  from holding SANTANDER UK 8 or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

SM Energy Co  vs.  SANTANDER UK 8

SM Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days SM Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SANTANDER UK 8

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SANTANDER UK 8 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SANTANDER is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SM Energy and SANTANDER

The main advantage of trading using opposite SM Energy and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy 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.

The idea behind SM Energy Co and SANTANDER UK 8 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.