Correlation Between Santander Bank and Noble Financials

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

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

Diversification Opportunities for Santander Bank and Noble Financials

0.07

Correlation Coefficient

Santander Bank  Noble Financials

Significant diversification

The 3 months correlation between Santander and Noble is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Noble Financials SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Financials and Santander Bank 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 Bank Polska are associated (or correlated) with Noble Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Financials has no effect on the direction of Santander Bank i.e., Santander Bank and Noble Financials go up and down completely randomly.

Pair Corralation between Santander Bank and Noble Financials

Assuming the 90 days trading horizon Santander Bank Polska is expected to generate 0.89 times more return on investment than Noble Financials. However, Santander Bank Polska is 1.13 times less risky than Noble Financials. It trades about 0.18 of its potential returns per unit of risk. Noble Financials SA is currently generating about 0.01 per unit of risk. If you would invest  46,090  in Santander Bank Polska on December 31, 2024 and sell it today you would earn a total of  10,570  from holding Santander Bank Polska or generate 22.93% return on investment over 90 days.

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

Santander Bank Polska  vs.  Noble Financials SA

Santander Bank Polska

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Santander Bank Polska are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Santander Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Noble Financials

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Noble Financials SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Noble Financials is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Santander Bank and Noble Financials

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

The idea behind Santander Bank Polska and Noble Financials 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.