Correlation Between SANTANDER and Bank of Ireland

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

By analyzing existing cross correlation between SANTANDER UK 8 and Bank of Ireland, you can compare the effects of market volatilities on SANTANDER and Bank of Ireland 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 Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Bank of Ireland.

Diversification Opportunities for SANTANDER and Bank of Ireland

-0.19

Correlation Coefficient

SANTANDER  Bank of Ireland

Good diversification

The 3 months correlation between SANTANDER and Bank is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 8 are associated (or correlated) with Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of SANTANDER i.e., SANTANDER and Bank of Ireland go up and down completely randomly.

Pair Corralation between SANTANDER and Bank of Ireland

Assuming the 90 days trading horizon SANTANDER UK 8 is expected to generate 0.08 times more return on investment than Bank of Ireland. However, SANTANDER UK 8 is 12.55 times less risky than Bank of Ireland. It trades about 0.02 of its potential returns per unit of risk. Bank of Ireland is currently generating about -0.1 per unit of risk. If you would invest  13,517  in SANTANDER UK 8 on September 2, 2024 and sell it today you would earn a total of  33.00  from holding SANTANDER UK 8 or generate 0.24% return on investment over 90 days.

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

SANTANDER UK 8  vs.  Bank of Ireland

SANTANDER UK 8

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SANTANDER UK 8 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SANTANDER is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SANTANDER and Bank of Ireland

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

The idea behind SANTANDER UK 8 and Bank of Ireland 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.