Correlation Between United Homes and BANCO

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

By analyzing existing cross correlation between United Homes Group and BANCO SANTANDER S, you can compare the effects of market volatilities on United Homes and BANCO 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 United Homes with a short position of BANCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and BANCO.

Diversification Opportunities for United Homes and BANCO

0.31

Correlation Coefficient

United Homes  BANCO

Weak diversification

The 3 months correlation between United and BANCO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and BANCO SANTANDER S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER S and United Homes 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 United Homes Group are associated (or correlated) with BANCO. 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 S has no effect on the direction of United Homes i.e., United Homes and BANCO go up and down completely randomly.

Pair Corralation between United Homes and BANCO

Considering the 90-day investment horizon United Homes Group is expected to under-perform the BANCO. In addition to that, United Homes is 4.6 times more volatile than BANCO SANTANDER S. It trades about -0.12 of its total potential returns per unit of risk. BANCO SANTANDER S is currently generating about 0.0 per unit of volatility. If you would invest  10,014  in BANCO SANTANDER S on October 10, 2024 and sell it today you would lose (10.00) from holding BANCO SANTANDER S or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

United Homes Group  vs.  BANCO SANTANDER S

United Homes Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Homes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BANCO SANTANDER S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANCO SANTANDER S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Homes and BANCO

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

The idea behind United Homes Group and BANCO SANTANDER S 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.