Correlation Between Grupo Aval and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Grupo Aval 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 Grupo Aval and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval and Banco Santander Chile, you can compare the effects of market volatilities on Grupo Aval 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 Grupo Aval with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and Banco Santander.
Diversification Opportunities for Grupo Aval and Banco Santander
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grupo and Banco is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Banco Santander Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Chile and Grupo Aval 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 Grupo Aval 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 Chile has no effect on the direction of Grupo Aval i.e., Grupo Aval and Banco Santander go up and down completely randomly.
Pair Corralation between Grupo Aval and Banco Santander
Given the investment horizon of 90 days Grupo Aval is expected to generate 2.89 times less return on investment than Banco Santander. In addition to that, Grupo Aval is 1.32 times more volatile than Banco Santander Chile. It trades about 0.01 of its total potential returns per unit of risk. Banco Santander Chile is currently generating about 0.05 per unit of volatility. If you would invest 1,428 in Banco Santander Chile on August 28, 2024 and sell it today you would earn a total of 467.00 from holding Banco Santander Chile or generate 32.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval vs. Banco Santander Chile
Performance |
| Timeline |
| Grupo Aval |
| Banco Santander Chile |
Grupo Aval and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and Banco Santander
The main advantage of trading using opposite Grupo Aval and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval 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.| Grupo Aval vs. Banco Santander Brasil | Grupo Aval vs. CrossFirst Bankshares | Grupo Aval vs. Banco Bradesco SA | Grupo Aval vs. CF Bankshares |
| Banco Santander vs. Bancolombia SA ADR | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. Credicorp | Banco Santander vs. Banco Santander Brasil |
Check out your portfolio center.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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