Correlation Between Airbus Group and Banco Santander

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

By analyzing existing cross correlation between Airbus Group SE and Banco Santander, you can compare the effects of market volatilities on Airbus Group 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 Airbus Group with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus Group and Banco Santander.

Diversification Opportunities for Airbus Group and Banco Santander

0.76

Correlation Coefficient

Airbus Group  Banco Santander

Poor diversification

The 3 months correlation between Airbus and Banco is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE and Banco Santander in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander and Airbus Group 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 Airbus Group SE 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 has no effect on the direction of Airbus Group i.e., Airbus Group and Banco Santander go up and down completely randomly.

Pair Corralation between Airbus Group and Banco Santander

Assuming the 90 days trading horizon Airbus Group is expected to generate 4.49 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Airbus Group SE is 1.32 times less risky than Banco Santander. It trades about 0.08 of its potential returns per unit of risk. Banco Santander is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  440.00  in Banco Santander on December 29, 2024 and sell it today you would earn a total of  192.00  from holding Banco Santander or generate 43.64% return on investment over 90 days.

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

Airbus Group SE  vs.  Banco Santander

Airbus Group SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Airbus Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Banco Santander

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Banco Santander exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Airbus Group and Banco Santander

The main advantage of trading using opposite Airbus Group and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus Group 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 Airbus Group SE and Banco Santander 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.