Correlation Between Sanlam Global and SANTANDER

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

By analyzing existing cross correlation between Sanlam Global Artificial and SANTANDER UK 10, you can compare the effects of market volatilities on Sanlam Global 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 Sanlam Global with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanlam Global and SANTANDER.

Diversification Opportunities for Sanlam Global and SANTANDER

0.17

Correlation Coefficient

Sanlam Global  SANTANDER

Average diversification

The 3 months correlation between Sanlam and SANTANDER is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam Global Artificial 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 Sanlam Global 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 Sanlam Global Artificial 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 Sanlam Global i.e., Sanlam Global and SANTANDER go up and down completely randomly.

Pair Corralation between Sanlam Global and SANTANDER

Assuming the 90 days trading horizon Sanlam Global Artificial is expected to generate 2.21 times more return on investment than SANTANDER. However, Sanlam Global is 2.21 times more volatile than SANTANDER UK 10. It trades about -0.02 of its potential returns per unit of risk. SANTANDER UK 10 is currently generating about -0.04 per unit of risk. If you would invest  38,051  in Sanlam Global Artificial on September 22, 2024 and sell it today you would lose (192.00) from holding Sanlam Global Artificial or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sanlam Global Artificial  vs.  SANTANDER UK 10

Sanlam Global Artificial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanlam Global Artificial are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak technical and fundamental indicators, Sanlam Global reported solid returns over the last few months and may actually be approaching a breakup point.

SANTANDER UK 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANTANDER UK 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, SANTANDER is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sanlam Global and SANTANDER

The main advantage of trading using opposite Sanlam Global and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanlam Global 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 Sanlam Global Artificial and SANTANDER UK 10 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.