Correlation Between Carlisle Companies and Banco Santander

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

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

Diversification Opportunities for Carlisle Companies and Banco Santander

0.78

Correlation Coefficient

Carlisle Companies  Banco Santander

Poor diversification

The 3 months correlation between Carlisle and Banco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Carlisle Companies Incorporate 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 Carlisle Companies 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 Carlisle Companies Incorporated 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 Carlisle Companies i.e., Carlisle Companies and Banco Santander go up and down completely randomly.

Pair Corralation between Carlisle Companies and Banco Santander

Considering the 90-day investment horizon Carlisle Companies is expected to generate 1.12 times less return on investment than Banco Santander. In addition to that, Carlisle Companies is 1.22 times more volatile than Banco Santander SA. It trades about 0.11 of its total potential returns per unit of risk. Banco Santander SA is currently generating about 0.16 per unit of volatility. If you would invest  431.00  in Banco Santander SA on August 7, 2024 and sell it today you would earn a total of  67.00  from holding Banco Santander SA or generate 15.55% return on investment over 90 days.

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

Carlisle Companies Incorporate  vs.  Banco Santander SA

Carlisle Companies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlisle Companies Incorporated are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Carlisle Companies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Banco Santander SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Banco Santander displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlisle Companies and Banco Santander

The main advantage of trading using opposite Carlisle Companies and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlisle Companies 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 Carlisle Companies Incorporated 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.