Correlation Between Virtus Investment and Santander Bank

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

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

Diversification Opportunities for Virtus Investment and Santander Bank

-0.01

Correlation Coefficient

Virtus Investment  Santander Bank

Good diversification

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

Pair Corralation between Virtus Investment and Santander Bank

Assuming the 90 days horizon Virtus Investment Partners is expected to generate 0.92 times more return on investment than Santander Bank. However, Virtus Investment Partners is 1.09 times less risky than Santander Bank. It trades about 0.1 of its potential returns per unit of risk. Santander Bank Polska is currently generating about 0.01 per unit of risk. If you would invest  18,397  in Virtus Investment Partners on September 29, 2024 and sell it today you would earn a total of  2,603  from holding Virtus Investment Partners or generate 14.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Virtus Investment Partners  vs.  Santander Bank Polska

Virtus Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Santander Bank Polska

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santander Bank Polska has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Santander Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Virtus Investment and Santander Bank

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

The idea behind Virtus Investment Partners and Santander Bank Polska 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.