Correlation Between Foreign Trade and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Foreign Trade 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 Foreign Trade and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Trade Bank and Banco Santander Chile, you can compare the effects of market volatilities on Foreign Trade 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 Foreign Trade with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Trade and Banco Santander.
Diversification Opportunities for Foreign Trade and Banco Santander
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Foreign and Banco is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Trade Bank 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 Foreign Trade 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 Foreign Trade Bank 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 Foreign Trade i.e., Foreign Trade and Banco Santander go up and down completely randomly.
Pair Corralation between Foreign Trade and Banco Santander
Considering the 90-day investment horizon Foreign Trade Bank is expected to generate 1.02 times more return on investment than Banco Santander. However, Foreign Trade is 1.02 times more volatile than Banco Santander Chile. It trades about 0.1 of its potential returns per unit of risk. Banco Santander Chile is currently generating about 0.02 per unit of risk. If you would invest 2,045 in Foreign Trade Bank on August 28, 2024 and sell it today you would earn a total of 1,353 from holding Foreign Trade Bank or generate 66.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Trade Bank vs. Banco Santander Chile
Performance |
| Timeline |
| Foreign Trade Bank |
| Banco Santander Chile |
Foreign Trade and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Trade and Banco Santander
The main advantage of trading using opposite Foreign Trade and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Trade 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.| Foreign Trade vs. Banco Santander Chile | Foreign Trade vs. Bancolombia SA ADR | Foreign Trade vs. Banco Bradesco SA | Foreign Trade vs. Credicorp |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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