Correlation Between Santander Bank and TRAVEL LEISURE

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

By analyzing existing cross correlation between Santander Bank Polska and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on Santander Bank and TRAVEL LEISURE 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 Santander Bank with a short position of TRAVEL LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santander Bank and TRAVEL LEISURE.

Diversification Opportunities for Santander Bank and TRAVEL LEISURE

-0.05

Correlation Coefficient

Santander Bank  TRAVEL LEISURE

Good diversification

The 3 months correlation between Santander and TRAVEL is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL and Santander Bank 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 Santander Bank Polska are associated (or correlated) with TRAVEL LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of Santander Bank i.e., Santander Bank and TRAVEL LEISURE go up and down completely randomly.

Pair Corralation between Santander Bank and TRAVEL LEISURE

Assuming the 90 days horizon Santander Bank Polska is expected to generate 2.04 times more return on investment than TRAVEL LEISURE. However, Santander Bank is 2.04 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.13 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about -0.39 per unit of risk. If you would invest  10,200  in Santander Bank Polska on September 27, 2024 and sell it today you would earn a total of  555.00  from holding Santander Bank Polska or generate 5.44% return on investment over 90 days.

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

Santander Bank Polska  vs.  TRAVEL LEISURE DL 01

Santander Bank Polska

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santander Bank Polska has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Santander Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TRAVEL LEISURE DL

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL LEISURE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Santander Bank and TRAVEL LEISURE

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

The idea behind Santander Bank Polska and TRAVEL LEISURE DL 01 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.