Correlation Between UmweltBank and Banco Santander

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

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

Diversification Opportunities for UmweltBank and Banco Santander

-0.21

Correlation Coefficient

UmweltBank  Banco Santander

Very good diversification

The 3 months correlation between UmweltBank and Banco is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and UmweltBank 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 UmweltBank AG are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of UmweltBank i.e., UmweltBank and Banco Santander go up and down completely randomly.

Pair Corralation between UmweltBank and Banco Santander

Assuming the 90 days trading horizon UmweltBank is expected to generate 1.1 times less return on investment than Banco Santander. In addition to that, UmweltBank is 1.11 times more volatile than Banco Santander SA. It trades about 0.05 of its total potential returns per unit of risk. Banco Santander SA is currently generating about 0.06 per unit of volatility. If you would invest  449.00  in Banco Santander SA on October 25, 2024 and sell it today you would earn a total of  25.00  from holding Banco Santander SA or generate 5.57% return on investment over 90 days.

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

UmweltBank AG  vs.  Banco Santander SA

UmweltBank AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UmweltBank AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UmweltBank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Banco Santander SA

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Banco Santander may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with UmweltBank and Banco Santander

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

The idea behind UmweltBank AG and Banco Santander 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..