Correlation Between Banco Santander and Airbus Group

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

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

Diversification Opportunities for Banco Santander and Airbus Group

0.41

Correlation Coefficient

Banco Santander  Airbus Group

Very weak diversification

The 3 months correlation between Banco and Airbus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE and Banco Santander 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 Banco Santander are associated (or correlated) with Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Banco Santander i.e., Banco Santander and Airbus Group go up and down completely randomly.

Pair Corralation between Banco Santander and Airbus Group

Assuming the 90 days trading horizon Banco Santander is expected to generate 1.14 times more return on investment than Airbus Group. However, Banco Santander is 1.14 times more volatile than Airbus Group SE. It trades about 0.11 of its potential returns per unit of risk. Airbus Group SE is currently generating about 0.11 per unit of risk. If you would invest  388.00  in Banco Santander on September 5, 2024 and sell it today you would earn a total of  56.00  from holding Banco Santander or generate 14.43% return on investment over 90 days.

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

Banco Santander  vs.  Airbus Group SE

Banco Santander

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Banco Santander is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Airbus Group SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Airbus Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Santander and Airbus Group

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

The idea behind Banco Santander and Airbus Group SE 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.