Correlation Between SANTANDER and CVR Energy

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

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

Diversification Opportunities for SANTANDER and CVR Energy

-0.15

Correlation Coefficient

SANTANDER  CVR Energy

Good diversification

The 3 months correlation between SANTANDER and CVR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and SANTANDER 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 UK 10 are associated (or correlated) with CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of SANTANDER i.e., SANTANDER and CVR Energy go up and down completely randomly.

Pair Corralation between SANTANDER and CVR Energy

Assuming the 90 days trading horizon SANTANDER UK 10 is expected to generate 0.06 times more return on investment than CVR Energy. However, SANTANDER UK 10 is 15.67 times less risky than CVR Energy. It trades about -0.08 of its potential returns per unit of risk. CVR Energy is currently generating about -0.03 per unit of risk. If you would invest  15,675  in SANTANDER UK 10 on October 22, 2024 and sell it today you would lose (235.00) from holding SANTANDER UK 10 or give up 1.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

SANTANDER UK 10  vs.  CVR Energy

SANTANDER UK 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANTANDER UK 10 has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SANTANDER and CVR Energy

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

The idea behind SANTANDER UK 10 and CVR Energy 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 CEOs Directory module to screen CEOs from public companies around the world.