Correlation Between Banco Santander and Truist Financial
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Truist Financial 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 Truist Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Chile and Truist Financial, you can compare the effects of market volatilities on Banco Santander and Truist Financial 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 Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Truist Financial.
Diversification Opportunities for Banco Santander and Truist Financial
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Banco and Truist is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial 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 Chile are associated (or correlated) with Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of Banco Santander i.e., Banco Santander and Truist Financial go up and down completely randomly.
Pair Corralation between Banco Santander and Truist Financial
Assuming the 90 days trading horizon Banco Santander Chile is expected to generate 0.69 times more return on investment than Truist Financial. However, Banco Santander Chile is 1.46 times less risky than Truist Financial. It trades about 0.06 of its potential returns per unit of risk. Truist Financial is currently generating about 0.03 per unit of risk. If you would invest 3,746 in Banco Santander Chile on October 14, 2024 and sell it today you would earn a total of 1,831 from holding Banco Santander Chile or generate 48.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Banco Santander Chile vs. Truist Financial
Performance |
| Timeline |
| Banco Santander Chile |
| Truist Financial |
Banco Santander and Truist Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Truist Financial
The main advantage of trading using opposite Banco Santander and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Truist Financial 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 Truist Financial will offset losses from the drop in Truist Financial's long position.| Banco Santander vs. Paycom Software | Banco Santander vs. Micron Technology | Banco Santander vs. Monster Beverage | Banco Santander vs. Marfrig Global Foods |
| Truist Financial vs. Taiwan Semiconductor Manufacturing | Truist Financial vs. Apple Inc | Truist Financial vs. Alibaba Group Holding | Truist Financial vs. Banco Santander Chile |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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