Correlation Between Graham Holdings and BANCO

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

By analyzing existing cross correlation between Graham Holdings Co and BANCO SANTANDER S, you can compare the effects of market volatilities on Graham Holdings and BANCO 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 Graham Holdings with a short position of BANCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and BANCO.

Diversification Opportunities for Graham Holdings and BANCO

-0.01

Correlation Coefficient

Graham Holdings  BANCO

Good diversification

The 3 months correlation between Graham and BANCO is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and BANCO SANTANDER S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER S and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with BANCO. 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 S has no effect on the direction of Graham Holdings i.e., Graham Holdings and BANCO go up and down completely randomly.

Pair Corralation between Graham Holdings and BANCO

Considering the 90-day investment horizon Graham Holdings Co is expected to generate 2.65 times more return on investment than BANCO. However, Graham Holdings is 2.65 times more volatile than BANCO SANTANDER S. It trades about 0.13 of its potential returns per unit of risk. BANCO SANTANDER S is currently generating about -0.02 per unit of risk. If you would invest  87,106  in Graham Holdings Co on December 28, 2024 and sell it today you would earn a total of  10,211  from holding Graham Holdings Co or generate 11.72% return on investment over 90 days.

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

Graham Holdings Co  vs.  BANCO SANTANDER S

Graham Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BANCO SANTANDER S

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Graham Holdings and BANCO

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

The idea behind Graham Holdings Co and BANCO SANTANDER S 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.