Correlation Between Banco Santander and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Banco Santander 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 Banco Santander and Banco Santander 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 Banco Santander SA, you can compare the effects of market volatilities on Banco Santander 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 Banco Santander with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Banco Santander.
Diversification Opportunities for Banco Santander and Banco Santander
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Banco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile 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 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 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 Banco Santander i.e., Banco Santander and Banco Santander go up and down completely randomly.
Pair Corralation between Banco Santander and Banco Santander
Assuming the 90 days trading horizon Banco Santander is expected to generate 3.56 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Banco Santander Chile is 2.15 times less risky than Banco Santander. It trades about 0.08 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,709 in Banco Santander SA on September 14, 2024 and sell it today you would earn a total of 195.00 from holding Banco Santander SA or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Chile vs. Banco Santander SA
Performance |
| Timeline |
| Banco Santander Chile |
| Banco Santander SA |
Banco Santander and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Banco Santander
The main advantage of trading using opposite Banco Santander and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander 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.| Banco Santander vs. Spotify Technology SA | Banco Santander vs. Hospital Mater Dei | Banco Santander vs. Fidelity National Information | Banco Santander vs. Lloyds Banking Group |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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