Correlation Between SANTANDER and Gruppo MutuiOnline

Can any of the company-specific risk be diversified away by investing in both SANTANDER and Gruppo MutuiOnline 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 Gruppo MutuiOnline 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 Gruppo MutuiOnline SpA, you can compare the effects of market volatilities on SANTANDER and Gruppo MutuiOnline 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 Gruppo MutuiOnline. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Gruppo MutuiOnline.

Diversification Opportunities for SANTANDER and Gruppo MutuiOnline

-0.4

Correlation Coefficient

SANTANDER  Gruppo MutuiOnline

Very good diversification

The 3 months correlation between SANTANDER and Gruppo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Gruppo MutuiOnline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo MutuiOnline SpA 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 Gruppo MutuiOnline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo MutuiOnline SpA has no effect on the direction of SANTANDER i.e., SANTANDER and Gruppo MutuiOnline go up and down completely randomly.

Pair Corralation between SANTANDER and Gruppo MutuiOnline

Assuming the 90 days trading horizon SANTANDER UK 10 is expected to under-perform the Gruppo MutuiOnline. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 10 is 10.96 times less risky than Gruppo MutuiOnline. The stock trades about -0.08 of its potential returns per unit of risk. The Gruppo MutuiOnline SpA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,249  in Gruppo MutuiOnline SpA on October 22, 2024 and sell it today you would earn a total of  296.00  from holding Gruppo MutuiOnline SpA or generate 9.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	45.9%
Values	Daily Returns

SANTANDER UK 10  vs.  Gruppo MutuiOnline SpA

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.

Gruppo MutuiOnline SpA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gruppo MutuiOnline SpA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gruppo MutuiOnline unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SANTANDER and Gruppo MutuiOnline

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

The idea behind SANTANDER UK 10 and Gruppo MutuiOnline SpA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.