Correlation Between Banco Santander and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander SA and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Banco Santander and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Sumitomo Mitsui.
Diversification Opportunities for Banco Santander and Sumitomo Mitsui
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Sumitomo is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 SA are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Banco Santander i.e., Banco Santander and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Banco Santander and Sumitomo Mitsui
Assuming the 90 days horizon Banco Santander SA is expected to generate 2.65 times more return on investment than Sumitomo Mitsui. However, Banco Santander is 2.65 times more volatile than Sumitomo Mitsui Financial. It trades about 0.05 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.09 per unit of risk. If you would invest 282.00 in Banco Santander SA on August 30, 2024 and sell it today you would earn a total of 163.00 from holding Banco Santander SA or generate 57.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.03% |
| Values | Daily Returns |
Banco Santander SA vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Banco Santander SA |
| Sumitomo Mitsui Financial |
Banco Santander and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Sumitomo Mitsui
The main advantage of trading using opposite Banco Santander and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Banco Santander vs. ANZ Group Holdings | Banco Santander vs. National Australia Bank | Banco Santander vs. Agricultural Bank | Banco Santander vs. Bank of America |
| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. HSBC Holdings PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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