Correlation Between SANTANDER and Molten Ventures

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

Diversification Opportunities for SANTANDER and Molten Ventures

-0.05

Correlation Coefficient

SANTANDER  Molten Ventures

Good diversification

The 3 months correlation between SANTANDER and Molten is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and Molten Ventures VCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molten Ventures VCT 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 Molten Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molten Ventures VCT has no effect on the direction of SANTANDER i.e., SANTANDER and Molten Ventures go up and down completely randomly.

Pair Corralation between SANTANDER and Molten Ventures

Assuming the 90 days trading horizon SANTANDER UK 10 is expected to generate 1.63 times more return on investment than Molten Ventures. However, SANTANDER is 1.63 times more volatile than Molten Ventures VCT. It trades about 0.06 of its potential returns per unit of risk. Molten Ventures VCT is currently generating about -0.05 per unit of risk. If you would invest  11,943  in SANTANDER UK 10 on October 3, 2024 and sell it today you would earn a total of  3,617  from holding SANTANDER UK 10 or generate 30.29% return on investment over 90 days.

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

SANTANDER UK 10  vs.  Molten Ventures VCT

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.

Molten Ventures VCT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molten Ventures VCT has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the fund private investors.

Pair Trading with SANTANDER and Molten Ventures

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

The idea behind SANTANDER UK 10 and Molten Ventures VCT 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.