Correlation Between Banco Santander and Grenergy Renovables

Can any of the company-specific risk be diversified away by investing in both Banco Santander and Grenergy Renovables 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 Banco Santander and Grenergy Renovables into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco Santander and Grenergy Renovables SA, you can compare the effects of market volatilities on Banco Santander and Grenergy Renovables 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 Banco Santander with a short position of Grenergy Renovables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Grenergy Renovables.

Diversification Opportunities for Banco Santander and Grenergy Renovables

0.01

Correlation Coefficient

Banco Santander  Grenergy Renovables

Significant diversification

The 3 months correlation between Banco and Grenergy is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander and Grenergy Renovables SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grenergy Renovables and Banco 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 Banco Santander are associated (or correlated) with Grenergy Renovables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grenergy Renovables has no effect on the direction of Banco Santander i.e., Banco Santander and Grenergy Renovables go up and down completely randomly.

Pair Corralation between Banco Santander and Grenergy Renovables

Assuming the 90 days trading horizon Banco Santander is expected to generate 0.4 times more return on investment than Grenergy Renovables. However, Banco Santander is 2.47 times less risky than Grenergy Renovables. It trades about 0.39 of its potential returns per unit of risk. Grenergy Renovables SA is currently generating about 0.04 per unit of risk. If you would invest  440.00  in Banco Santander on October 20, 2024 and sell it today you would earn a total of  40.00  from holding Banco Santander or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Banco Santander  vs.  Grenergy Renovables SA

Banco Santander

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Banco Santander may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Grenergy Renovables

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grenergy Renovables SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Grenergy Renovables is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Banco Santander and Grenergy Renovables

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

The idea behind Banco Santander and Grenergy Renovables SA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.