Correlation Between Banco Santander and Credicorp
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Credicorp 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 Credicorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Brasil and Credicorp, you can compare the effects of market volatilities on Banco Santander and Credicorp 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 Credicorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Credicorp.
Diversification Opportunities for Banco Santander and Credicorp
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Banco and Credicorp is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp 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 Brasil are associated (or correlated) with Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of Banco Santander i.e., Banco Santander and Credicorp go up and down completely randomly.
Pair Corralation between Banco Santander and Credicorp
Given the investment horizon of 90 days Banco Santander Brasil is expected to generate 1.11 times more return on investment than Credicorp. However, Banco Santander is 1.11 times more volatile than Credicorp. It trades about 0.5 of its potential returns per unit of risk. Credicorp is currently generating about -0.02 per unit of risk. If you would invest 382.00 in Banco Santander Brasil on November 4, 2024 and sell it today you would earn a total of 69.00 from holding Banco Santander Brasil or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. Credicorp
Performance |
| Timeline |
| Banco Santander Brasil |
| Credicorp |
Banco Santander and Credicorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Credicorp
The main advantage of trading using opposite Banco Santander and Credicorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Credicorp 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 Credicorp will offset losses from the drop in Credicorp's long position.| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
| Credicorp vs. Heritage Financial | Credicorp vs. Home Federal Bancorp | Credicorp vs. Magyar Bancorp | Credicorp vs. National Bankshares |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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