Correlation Between Bank of America and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Banco Santander Chile, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Banco Santander.
Diversification Opportunities for Bank of America and Banco Santander
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Banco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America 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 Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and Banco Santander go up and down completely randomly.
Pair Corralation between Bank of America and Banco Santander
Considering the 90-day investment horizon Bank of America is expected to under-perform the Banco Santander. In addition to that, Bank of America is 1.06 times more volatile than Banco Santander Chile. It trades about -0.02 of its total potential returns per unit of risk. Banco Santander Chile is currently generating about 0.11 per unit of volatility. If you would invest 1,895 in Banco Santander Chile on October 25, 2024 and sell it today you would earn a total of 93.00 from holding Banco Santander Chile or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Banco Santander Chile
Performance |
| Timeline |
| Bank of America |
| Banco Santander Chile |
Bank of America and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Banco Santander
The main advantage of trading using opposite Bank of America and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. JPMorgan Chase Co | Bank of America vs. Bank of America | Bank of America vs. RLJ Lodging Trust | Bank of America vs. PennyMac Finl Svcs |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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