Correlation Between SANTANDER and UBS Plc
Can any of the company-specific risk be diversified away by investing in both SANTANDER and UBS Plc 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 UBS Plc 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 UBS plc , you can compare the effects of market volatilities on SANTANDER and UBS Plc 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 UBS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and UBS Plc.
Diversification Opportunities for SANTANDER and UBS Plc
Very weak diversification
The 3 months correlation between SANTANDER and UBS is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 10 and UBS plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS 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 UBS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS plc has no effect on the direction of SANTANDER i.e., SANTANDER and UBS Plc go up and down completely randomly.
Pair Corralation between SANTANDER and UBS Plc
Assuming the 90 days trading horizon SANTANDER is expected to generate 26.02 times less return on investment than UBS Plc. But when comparing it to its historical volatility, SANTANDER UK 10 is 2.44 times less risky than UBS Plc. It trades about 0.02 of its potential returns per unit of risk. UBS plc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 844,850 in UBS plc on September 7, 2024 and sell it today you would earn a total of 79,250 from holding UBS plc or generate 9.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
SANTANDER UK 10 vs. UBS plc
Performance |
Timeline |
SANTANDER UK 10 |
UBS plc |
SANTANDER and UBS Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SANTANDER and UBS Plc
The main advantage of trading using opposite SANTANDER and UBS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER position performs unexpectedly, UBS Plc 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 UBS Plc will offset losses from the drop in UBS Plc's long position.SANTANDER vs. Discover Financial Services | SANTANDER vs. Cembra Money Bank | SANTANDER vs. Coor Service Management | SANTANDER vs. St Galler Kantonalbank |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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