Correlation Between Banco Santander and Patria Investments
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Patria Investments 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 Patria Investments 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 Patria Investments Limited, you can compare the effects of market volatilities on Banco Santander and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Patria Investments.
Diversification Opportunities for Banco Santander and Patria Investments
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Banco and Patria is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Banco Santander i.e., Banco Santander and Patria Investments go up and down completely randomly.
Pair Corralation between Banco Santander and Patria Investments
Assuming the 90 days trading horizon Banco Santander Chile is expected to generate 0.67 times more return on investment than Patria Investments. However, Banco Santander Chile is 1.5 times less risky than Patria Investments. It trades about -0.2 of its potential returns per unit of risk. Patria Investments Limited is currently generating about -0.26 per unit of risk. If you would invest 5,766 in Banco Santander Chile on October 14, 2024 and sell it today you would lose (189.00) from holding Banco Santander Chile or give up 3.28% 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. Patria Investments Limited
Performance |
| Timeline |
| Banco Santander Chile |
| Patria Investments |
Banco Santander and Patria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Patria Investments
The main advantage of trading using opposite Banco Santander and Patria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Patria Investments 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 Patria Investments will offset losses from the drop in Patria Investments' long position.| Banco Santander vs. Paycom Software | Banco Santander vs. Micron Technology | Banco Santander vs. Monster Beverage | Banco Santander vs. Marfrig Global Foods |
| Patria Investments vs. Fair Isaac | Patria Investments vs. United Airlines Holdings | Patria Investments vs. Westinghouse Air Brake | Patria Investments vs. SK Telecom Co, |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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