Correlation Between UF Games and Banco Santander

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Can any of the company-specific risk be diversified away by investing in both UF Games and Banco Santander 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 UF Games and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UF Games SA and Banco Santander SA, you can compare the effects of market volatilities on UF Games and Banco Santander 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 UF Games with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of UF Games and Banco Santander.

Diversification Opportunities for UF Games and Banco Santander

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between UFG and Banco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding UF Games SA and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and UF Games 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 UF Games SA are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of UF Games i.e., UF Games and Banco Santander go up and down completely randomly.

Pair Corralation between UF Games and Banco Santander

Assuming the 90 days trading horizon UF Games SA is expected to under-perform the Banco Santander. In addition to that, UF Games is 1.39 times more volatile than Banco Santander SA. It trades about -0.26 of its total potential returns per unit of risk. Banco Santander SA is currently generating about 0.05 per unit of volatility. If you would invest  1,842  in Banco Santander SA on September 6, 2024 and sell it today you would earn a total of  78.00  from holding Banco Santander SA or generate 4.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy69.84%
ValuesDaily Returns

UF Games SA  vs.  Banco Santander SA

 Performance 
       Timeline  
UF Games SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days UF Games 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Banco Santander SA 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Banco Santander is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

UF Games and Banco Santander Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UF Games and Banco Santander

The main advantage of trading using opposite UF Games and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UF Games position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.
The idea behind UF Games SA and Banco Santander 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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