Correlation Between Banco Santander and Wienerberger

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

By analyzing existing cross correlation between Banco Santander SA and Wienerberger AG, you can compare the effects of market volatilities on Banco Santander and Wienerberger 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 Wienerberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Wienerberger.

Diversification Opportunities for Banco Santander and Wienerberger

0.73

Correlation Coefficient

Banco Santander  Wienerberger

Poor diversification

The 3 months correlation between Banco and Wienerberger is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Wienerberger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger AG 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 SA are associated (or correlated) with Wienerberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wienerberger AG has no effect on the direction of Banco Santander i.e., Banco Santander and Wienerberger go up and down completely randomly.

Pair Corralation between Banco Santander and Wienerberger

Assuming the 90 days trading horizon Banco Santander SA is expected to generate 1.48 times more return on investment than Wienerberger. However, Banco Santander is 1.48 times more volatile than Wienerberger AG. It trades about 0.14 of its potential returns per unit of risk. Wienerberger AG is currently generating about 0.07 per unit of risk. If you would invest  442.00  in Banco Santander SA on January 31, 2024 and sell it today you would earn a total of  22.00  from holding Banco Santander SA or generate 4.98% return on investment over 90 days.

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

Banco Santander SA  vs.  Wienerberger AG

Banco Santander SA

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Banco Santander demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Wienerberger AG

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wienerberger AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Wienerberger may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Banco Santander and Wienerberger

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

The idea behind Banco Santander SA and Wienerberger AG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.