Correlation Between Banco Santander and National Bank
Can any of the company-specific risk be diversified away by investing in both Banco Santander and National Bank 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 Bank 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 Bank Holdings, you can compare the effects of market volatilities on Banco Santander and National Bank 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 Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and National Bank.
Diversification Opportunities for Banco Santander and National Bank
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and National is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Banco Santander i.e., Banco Santander and National Bank go up and down completely randomly.
Pair Corralation between Banco Santander and National Bank
Given the investment horizon of 90 days Banco Santander Chile is expected to under-perform the National Bank. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 2.33 times less risky than National Bank. The stock trades about -0.26 of its potential returns per unit of risk. The National Bank Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,550 in National Bank Holdings on August 28, 2024 and sell it today you would earn a total of 389.00 from holding National Bank Holdings or generate 8.55% 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. National Bank Holdings
Performance |
| Timeline |
| Banco Santander Chile |
| National Bank Holdings |
Banco Santander and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and National Bank
The main advantage of trading using opposite Banco Santander and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, National Bank 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 Bank will offset losses from the drop in National Bank'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 Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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