Correlation Between Beta MWIG40TR and Banco Santander

Can any of the company-specific risk be diversified away by investing in both Beta MWIG40TR 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 Beta MWIG40TR and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beta mWIG40TR Portfelowy and Banco Santander SA, you can compare the effects of market volatilities on Beta MWIG40TR 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 Beta MWIG40TR with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beta MWIG40TR and Banco Santander.

Diversification Opportunities for Beta MWIG40TR and Banco Santander

-0.12

Correlation Coefficient

Beta MWIG40TR  Banco Santander

Good diversification

The 3 months correlation between Beta and Banco is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Beta mWIG40TR Portfelowy and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and Beta MWIG40TR 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 Beta mWIG40TR Portfelowy 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 SA has no effect on the direction of Beta MWIG40TR i.e., Beta MWIG40TR and Banco Santander go up and down completely randomly.

Pair Corralation between Beta MWIG40TR and Banco Santander

Assuming the 90 days trading horizon Beta mWIG40TR Portfelowy is expected to under-perform the Banco Santander. But the etf apears to be less risky and, when comparing its historical volatility, Beta mWIG40TR Portfelowy is 1.95 times less risky than Banco Santander. The etf trades about -0.09 of its potential returns per unit of risk. The Banco Santander SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,901  in Banco Santander SA on September 2, 2024 and sell it today you would lose (23.00) from holding Banco Santander SA or give up 1.21% of portfolio value over 90 days.

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

Beta mWIG40TR Portfelowy  vs.  Banco Santander SA

Beta mWIG40TR Portfelowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beta mWIG40TR Portfelowy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Beta MWIG40TR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Banco Santander SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Banco Santander is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Beta MWIG40TR and Banco Santander

The main advantage of trading using opposite Beta MWIG40TR and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beta MWIG40TR 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 Beta mWIG40TR Portfelowy and Banco Santander SA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.