Correlation Between SLR Investment and Santander Bank

Can any of the company-specific risk be diversified away by investing in both SLR 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 SLR 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 SLR Investment Corp and Santander Bank Polska, you can compare the effects of market volatilities on SLR 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 SLR Investment with a short position of Santander Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Santander Bank.

Diversification Opportunities for SLR Investment and Santander Bank

-0.02

Correlation Coefficient

SLR Investment  Santander Bank

Good diversification

The 3 months correlation between SLR and Santander is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp 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 SLR 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and Santander Bank go up and down completely randomly.

Pair Corralation between SLR Investment and Santander Bank

Assuming the 90 days horizon SLR Investment is expected to generate 2.06 times less return on investment than Santander Bank. But when comparing it to its historical volatility, SLR Investment Corp is 1.73 times less risky than Santander Bank. It trades about 0.12 of its potential returns per unit of risk. Santander Bank Polska is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,065  in Santander Bank Polska on September 29, 2024 and sell it today you would earn a total of  620.00  from holding Santander Bank Polska or generate 6.16% return on investment over 90 days.

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

SLR Investment Corp  vs.  Santander Bank Polska

SLR Investment Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SLR 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 SLR Investment and Santander Bank

The main advantage of trading using opposite SLR Investment and Santander Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR 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 SLR Investment Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.