Correlation Between SANTANDER and Fidelity Sustainable

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

Diversification Opportunities for SANTANDER and Fidelity Sustainable

0.45

Correlation Coefficient

SANTANDER  Fidelity Sustainable

Very weak diversification

The 3 months correlation between SANTANDER and Fidelity is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Fidelity Sustainable USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable USD 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 Fidelity Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable USD has no effect on the direction of SANTANDER i.e., SANTANDER and Fidelity Sustainable go up and down completely randomly.

Pair Corralation between SANTANDER and Fidelity Sustainable

Assuming the 90 days trading horizon SANTANDER UK 10 is expected to under-perform the Fidelity Sustainable. But the stock apears to be less risky and, when comparing its historical volatility, SANTANDER UK 10 is 1.48 times less risky than Fidelity Sustainable. The stock trades about -0.06 of its potential returns per unit of risk. The Fidelity Sustainable USD is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  394.00  in Fidelity Sustainable USD on October 24, 2024 and sell it today you would lose (1.00) from holding Fidelity Sustainable USD or give up 0.25% of portfolio value over 90 days.

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

SANTANDER UK 10  vs.  Fidelity Sustainable USD

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.

Fidelity Sustainable USD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Sustainable USD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fidelity Sustainable is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SANTANDER and Fidelity Sustainable

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

The idea behind SANTANDER UK 10 and Fidelity Sustainable USD 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.