Correlation Between RTW Venture and SANTANDER

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

By analyzing existing cross correlation between RTW Venture Fund and SANTANDER UK 10, you can compare the effects of market volatilities on RTW Venture 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 RTW Venture with a short position of SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTW Venture and SANTANDER.

Diversification Opportunities for RTW Venture and SANTANDER

-0.81

Correlation Coefficient

RTW Venture  SANTANDER

Pay attention - limited upside

The 3 months correlation between RTW and SANTANDER is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding RTW Venture Fund and SANTANDER UK 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 10 and RTW Venture 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 RTW Venture Fund 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 10 has no effect on the direction of RTW Venture i.e., RTW Venture and SANTANDER go up and down completely randomly.

Pair Corralation between RTW Venture and SANTANDER

Assuming the 90 days trading horizon RTW Venture Fund is expected to under-perform the SANTANDER. In addition to that, RTW Venture is 1.25 times more volatile than SANTANDER UK 10. It trades about -0.14 of its total potential returns per unit of risk. SANTANDER UK 10 is currently generating about 0.09 per unit of volatility. If you would invest  15,051  in SANTANDER UK 10 on December 28, 2024 and sell it today you would earn a total of  884.00  from holding SANTANDER UK 10 or generate 5.87% return on investment over 90 days.

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

RTW Venture Fund  vs.  SANTANDER UK 10

RTW Venture Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days RTW Venture Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

SANTANDER UK 10

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SANTANDER UK 10 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, SANTANDER is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with RTW Venture and SANTANDER

The main advantage of trading using opposite RTW Venture and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTW Venture 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 RTW Venture Fund and SANTANDER UK 10 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.