Correlation Between BC IRON and Santander Bank

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

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

Diversification Opportunities for BC IRON and Santander Bank

-0.33

Correlation Coefficient

BC IRON  Santander Bank

Very good diversification

The 3 months correlation between BC3 and Santander is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON and Santander Bank Polska in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santander Bank Polska and BC IRON 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 BC IRON are associated (or correlated) with Santander Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santander Bank Polska has no effect on the direction of BC IRON i.e., BC IRON and Santander Bank go up and down completely randomly.

Pair Corralation between BC IRON and Santander Bank

Assuming the 90 days trading horizon BC IRON is expected to generate 0.87 times more return on investment than Santander Bank. However, BC IRON is 1.15 times less risky than Santander Bank. It trades about 0.25 of its potential returns per unit of risk. Santander Bank Polska is currently generating about 0.1 per unit of risk. If you would invest  15.00  in BC IRON on October 22, 2024 and sell it today you would earn a total of  1.00  from holding BC IRON or generate 6.67% return on investment over 90 days.

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

BC IRON  vs.  Santander Bank Polska

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

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

Santander Bank Polska

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Santander Bank Polska are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Santander Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BC IRON and Santander Bank

The main advantage of trading using opposite BC IRON and Santander Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC IRON position performs unexpectedly, Santander Bank 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 Bank will offset losses from the drop in Santander Bank's long position.

The idea behind BC IRON and Santander Bank Polska 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.