Correlation Between ON SEMICONDUCTOR and Santander Bank

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

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

Diversification Opportunities for ON SEMICONDUCTOR and Santander Bank

-0.56

Correlation Coefficient

ON SEMICONDUCTOR  Santander Bank

Excellent diversification

The 3 months correlation between XS4 and Santander is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and Santander Bank go up and down completely randomly.

Pair Corralation between ON SEMICONDUCTOR and Santander Bank

Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to under-perform the Santander Bank. In addition to that, ON SEMICONDUCTOR is 1.08 times more volatile than Santander Bank Polska. It trades about -0.14 of its total potential returns per unit of risk. Santander Bank Polska is currently generating about 0.1 per unit of volatility. If you would invest  10,385  in Santander Bank Polska on October 27, 2024 and sell it today you would earn a total of  1,455  from holding Santander Bank Polska or generate 14.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

ON SEMICONDUCTOR  vs.  Santander Bank Polska

ON SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Santander Bank Polska

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Santander Bank Polska are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Santander Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ON SEMICONDUCTOR and Santander Bank

The main advantage of trading using opposite ON SEMICONDUCTOR and Santander Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.