Correlation Between Banco Santander and National Capital
Can any of the company-specific risk be diversified away by investing in both Banco Santander and National Capital 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 National Capital 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 National Capital Bank, you can compare the effects of market volatilities on Banco Santander and National Capital 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 National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and National Capital.
Diversification Opportunities for Banco Santander and National Capital
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Banco and National is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank 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 National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of Banco Santander i.e., Banco Santander and National Capital go up and down completely randomly.
Pair Corralation between Banco Santander and National Capital
Given the investment horizon of 90 days Banco Santander Chile is expected to under-perform the National Capital. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 96.19 times less risky than National Capital. The stock trades about 0.0 of its potential returns per unit of risk. The National Capital Bank is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 17,300 in National Capital Bank on September 1, 2024 and sell it today you would lose (8,800) from holding National Capital Bank or give up 50.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Banco Santander Chile vs. National Capital Bank
Performance |
| Timeline |
| Banco Santander Chile |
| National Capital Bank |
Banco Santander and National Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and National Capital
The main advantage of trading using opposite Banco Santander and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, National Capital 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 National Capital will offset losses from the drop in National Capital'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 |
| National Capital vs. Delhi Bank Corp | National Capital vs. CCSB Financial Corp | National Capital vs. Bank of Utica | National Capital vs. BEO 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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