Correlation Between Banco Santander and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both Banco Santander and CF Bankshares 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 CF Bankshares 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 CF Bankshares, you can compare the effects of market volatilities on Banco Santander and CF Bankshares 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 CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and CF Bankshares.
Diversification Opportunities for Banco Santander and CF Bankshares
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and CFBK is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares 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 CF Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Bankshares has no effect on the direction of Banco Santander i.e., Banco Santander and CF Bankshares go up and down completely randomly.
Pair Corralation between Banco Santander and CF Bankshares
Given the investment horizon of 90 days Banco Santander Chile is expected to under-perform the CF Bankshares. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 1.94 times less risky than CF Bankshares. The stock trades about -0.27 of its potential returns per unit of risk. The CF Bankshares is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,543 in CF Bankshares on August 27, 2024 and sell it today you would earn a total of 257.00 from holding CF Bankshares or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Chile vs. CF Bankshares
Performance |
| Timeline |
| Banco Santander Chile |
| CF Bankshares |
Banco Santander and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and CF Bankshares
The main advantage of trading using opposite Banco Santander and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, CF Bankshares 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 CF Bankshares will offset losses from the drop in CF Bankshares' long position.| Banco Santander vs. Bancolombia SA ADR | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. Credicorp | Banco Santander vs. Banco Santander Brasil |
| CF Bankshares vs. Magyar Bancorp | CF Bankshares vs. Home Federal Bancorp | CF Bankshares vs. Community West Bancshares | CF Bankshares vs. First Financial Northwest |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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