Correlation Between Banestes and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Banestes 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 Banestes and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banestes SA and Banco Santander SA, you can compare the effects of market volatilities on Banestes 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 Banestes with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banestes and Banco Santander.
Diversification Opportunities for Banestes and Banco Santander
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banestes and Banco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Banestes SA and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and Banestes 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 Banestes SA 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 SA has no effect on the direction of Banestes i.e., Banestes and Banco Santander go up and down completely randomly.
Pair Corralation between Banestes and Banco Santander
Assuming the 90 days trading horizon Banestes SA is expected to generate 0.37 times more return on investment than Banco Santander. However, Banestes SA is 2.72 times less risky than Banco Santander. It trades about -0.35 of its potential returns per unit of risk. Banco Santander SA is currently generating about -0.25 per unit of risk. If you would invest 870.00 in Banestes SA on August 28, 2024 and sell it today you would lose (34.00) from holding Banestes SA or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banestes SA vs. Banco Santander SA
Performance |
| Timeline |
| Banestes SA |
| Banco Santander SA |
Banestes and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banestes and Banco Santander
The main advantage of trading using opposite Banestes and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banestes 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.| Banestes vs. Banestes SA | Banestes vs. Banco da Amaznia | Banestes vs. Banco ABC Brasil | Banestes vs. Banco do Estado |
| Banco Santander vs. Banco do Estado | Banco Santander vs. Banco do Estado | Banco Santander vs. Banco da Amaznia | Banco Santander vs. BRB Banco de |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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