Correlation Between SANTANDER and Endo International

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

Diversification Opportunities for SANTANDER and Endo International

0.47

Correlation Coefficient

SANTANDER  Endo International

Very weak diversification

The 3 months correlation between SANTANDER and Endo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Endo International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endo International PLC 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 Endo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endo International PLC has no effect on the direction of SANTANDER i.e., SANTANDER and Endo International go up and down completely randomly.

Pair Corralation between SANTANDER and Endo International

Assuming the 90 days trading horizon SANTANDER UK 10 is expected to under-perform the Endo International. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 10 is 3.43 times less risky than Endo International. The stock trades about -0.03 of its potential returns per unit of risk. The Endo International PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  62,911  in Endo International PLC on December 1, 2024 and sell it today you would earn a total of  4,784  from holding Endo International PLC or generate 7.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

SANTANDER UK 10  vs.  Endo International PLC

SANTANDER UK 10

Risk-Adjusted Performance

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Endo International PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endo International PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Endo International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SANTANDER and Endo International

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

The idea behind SANTANDER UK 10 and Endo International PLC 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.