Correlation Between BBVA Banco and Banco Santander
Can any of the company-specific risk be diversified away by investing in both BBVA Banco 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 BBVA Banco and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBVA Banco Frances and Banco Santander Chile, you can compare the effects of market volatilities on BBVA Banco 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 BBVA Banco with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Banco Santander.
Diversification Opportunities for BBVA Banco and Banco Santander
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BBVA and Banco is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances 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 BBVA Banco 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 BBVA Banco Frances 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 BBVA Banco i.e., BBVA Banco and Banco Santander go up and down completely randomly.
Pair Corralation between BBVA Banco and Banco Santander
Given the investment horizon of 90 days BBVA Banco Frances is expected to generate 2.48 times more return on investment than Banco Santander. However, BBVA Banco is 2.48 times more volatile than Banco Santander Chile. It trades about 0.12 of its potential returns per unit of risk. Banco Santander Chile is currently generating about 0.04 per unit of risk. If you would invest 229.00 in BBVA Banco Frances on August 27, 2024 and sell it today you would earn a total of 1,426 from holding BBVA Banco Frances or generate 622.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Banco Santander Chile
Performance |
| Timeline |
| BBVA Banco Frances |
| Banco Santander Chile |
BBVA Banco and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Banco Santander
The main advantage of trading using opposite BBVA Banco and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco 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.| BBVA Banco vs. Banco Macro SA | BBVA Banco vs. Grupo Financiero Galicia | BBVA Banco vs. Banco Bradesco SA | BBVA Banco vs. Itau Unibanco Banco |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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