Correlation Between 88 Energy and SANTANDER

Can any of the company-specific risk be diversified away by investing in both 88 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 88 Energy and SANTANDER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 88 Energy and SANTANDER UK 8, you can compare the effects of market volatilities on 88 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 88 Energy with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and SANTANDER.

Diversification Opportunities for 88 Energy and SANTANDER

0.5

Correlation Coefficient

88 Energy  SANTANDER

Very weak diversification

The 3 months correlation between 88E and SANTANDER is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy 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 88 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 88 Energy 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 88 Energy i.e., 88 Energy and SANTANDER go up and down completely randomly.

Pair Corralation between 88 Energy and SANTANDER

Assuming the 90 days trading horizon 88 Energy is expected to under-perform the SANTANDER. In addition to that, 88 Energy is 6.96 times more volatile than SANTANDER UK 8. It trades about -0.04 of its total potential returns per unit of risk. SANTANDER UK 8 is currently generating about 0.07 per unit of volatility. If you would invest  10,431  in SANTANDER UK 8 on September 1, 2024 and sell it today you would earn a total of  3,119  from holding SANTANDER UK 8 or generate 29.9% return on investment over 90 days.

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

88 Energy  vs.  SANTANDER UK 8

88 Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 88 Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

SANTANDER UK 8

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SANTANDER UK 8 are ranked lower than 2 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with 88 Energy and SANTANDER

The main advantage of trading using opposite 88 Energy and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 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 88 Energy 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.

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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.