Correlation Between Banco Santander and Honda
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Honda 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 Honda 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 Honda Motor Co, you can compare the effects of market volatilities on Banco Santander and Honda 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 Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Honda.
Diversification Opportunities for Banco Santander and Honda
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Banco and Honda is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor 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 Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Banco Santander i.e., Banco Santander and Honda go up and down completely randomly.
Pair Corralation between Banco Santander and Honda
Assuming the 90 days trading horizon Banco Santander Chile is expected to generate 0.57 times more return on investment than Honda. However, Banco Santander Chile is 1.76 times less risky than Honda. It trades about -0.12 of its potential returns per unit of risk. Honda Motor Co is currently generating about -0.31 per unit of risk. If you would invest 5,796 in Banco Santander Chile on August 30, 2024 and sell it today you would lose (206.00) from holding Banco Santander Chile or give up 3.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Chile vs. Honda Motor Co
Performance |
| Timeline |
| Banco Santander Chile |
| Honda Motor |
Banco Santander and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Honda
The main advantage of trading using opposite Banco Santander and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| Banco Santander vs. Paycom Software | Banco Santander vs. Beyond Meat | Banco Santander vs. Take Two Interactive Software | Banco Santander vs. Hospital Mater Dei |
| Honda vs. GP Investments | Honda vs. Align Technology | Honda vs. Apartment Investment and | Honda vs. HDFC Bank Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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