Correlation Between Banco Santander and BancFirst
Can any of the company-specific risk be diversified away by investing in both Banco Santander and BancFirst 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 BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Chile and BancFirst, you can compare the effects of market volatilities on Banco Santander and BancFirst 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 BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and BancFirst.
Diversification Opportunities for Banco Santander and BancFirst
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and BancFirst is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst 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 Chile are associated (or correlated) with BancFirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BancFirst has no effect on the direction of Banco Santander i.e., Banco Santander and BancFirst go up and down completely randomly.
Pair Corralation between Banco Santander and BancFirst
Given the investment horizon of 90 days Banco Santander Chile is expected to under-perform the BancFirst. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 3.18 times less risky than BancFirst. The stock trades about -0.13 of its potential returns per unit of risk. The BancFirst is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 11,090 in BancFirst on August 31, 2024 and sell it today you would earn a total of 1,646 from holding BancFirst or generate 14.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Chile vs. BancFirst
Performance |
| Timeline |
| Banco Santander Chile |
| BancFirst |
Banco Santander and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and BancFirst
The main advantage of trading using opposite Banco Santander and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, BancFirst 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 BancFirst will offset losses from the drop in BancFirst's long position.| Banco Santander vs. Bancolombia SA ADR | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. Credicorp | Banco Santander vs. Banco Santander Brasil |
| BancFirst vs. Glacier Bancorp | BancFirst vs. BOK Financial | BancFirst vs. First Financial Bancorp | BancFirst vs. First Bancorp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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