Correlation Between Santander Bank and Carlson Investments

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

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

Diversification Opportunities for Santander Bank and Carlson Investments

0.46

Correlation Coefficient

Santander Bank  Carlson Investments

Very weak diversification

The 3 months correlation between Santander and Carlson is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Santander Bank Polska and Carlson Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlson Investments and Santander Bank 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 Santander Bank Polska are associated (or correlated) with Carlson Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlson Investments has no effect on the direction of Santander Bank i.e., Santander Bank and Carlson Investments go up and down completely randomly.

Pair Corralation between Santander Bank and Carlson Investments

Assuming the 90 days trading horizon Santander Bank Polska is expected to under-perform the Carlson Investments. But the stock apears to be less risky and, when comparing its historical volatility, Santander Bank Polska is 1.52 times less risky than Carlson Investments. The stock trades about -0.11 of its potential returns per unit of risk. The Carlson Investments SA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  524.00  in Carlson Investments SA on August 30, 2024 and sell it today you would lose (82.00) from holding Carlson Investments SA or give up 15.65% of portfolio value over 90 days.

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

Santander Bank Polska  vs.  Carlson Investments SA

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. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Carlson Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlson Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Santander Bank and Carlson Investments

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

The idea behind Santander Bank Polska and Carlson Investments SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.