Correlation Between Intermediate Capital and SANTANDER

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

By analyzing existing cross correlation between Intermediate Capital Group and SANTANDER UK 8, you can compare the effects of market volatilities on Intermediate Capital and 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 Intermediate Capital with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and SANTANDER.

Diversification Opportunities for Intermediate Capital and SANTANDER

-0.04

Correlation Coefficient

Intermediate Capital  SANTANDER

Good diversification

The 3 months correlation between Intermediate and SANTANDER is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 8 has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and SANTANDER go up and down completely randomly.

Pair Corralation between Intermediate Capital and SANTANDER

Assuming the 90 days trading horizon Intermediate Capital Group is expected to generate 8.46 times more return on investment than SANTANDER. However, Intermediate Capital is 8.46 times more volatile than SANTANDER UK 8. It trades about 0.04 of its potential returns per unit of risk. SANTANDER UK 8 is currently generating about 0.03 per unit of risk. If you would invest  204,723  in Intermediate Capital Group on October 10, 2024 and sell it today you would earn a total of  6,077  from holding Intermediate Capital Group or generate 2.97% return on investment over 90 days.

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

Intermediate Capital Group  vs.  SANTANDER UK 8

Intermediate Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SANTANDER UK 8

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SANTANDER UK 8 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SANTANDER is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intermediate Capital and SANTANDER

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

The idea behind Intermediate Capital Group and SANTANDER UK 8 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.