Correlation Between Banco Santander and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Banco Santander and BBVA Banco 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 BBVA Banco 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 BBVA Banco Frances, you can compare the effects of market volatilities on Banco Santander and BBVA Banco 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 BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and BBVA Banco.
Diversification Opportunities for Banco Santander and BBVA Banco
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and BBVA is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances 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 BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of Banco Santander i.e., Banco Santander and BBVA Banco go up and down completely randomly.
Pair Corralation between Banco Santander and BBVA Banco
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the BBVA Banco. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.74 times less risky than BBVA Banco. The stock trades about -0.26 of its potential returns per unit of risk. The BBVA Banco Frances is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,381 in BBVA Banco Frances on August 27, 2024 and sell it today you would earn a total of 274.00 from holding BBVA Banco Frances or generate 19.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. BBVA Banco Frances
Performance |
| Timeline |
| Banco Santander Brasil |
| BBVA Banco Frances |
Banco Santander and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and BBVA Banco
The main advantage of trading using opposite Banco Santander and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco'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 |
| BBVA Banco vs. Banco Macro SA | BBVA Banco vs. Grupo Financiero Galicia | BBVA Banco vs. Banco Bradesco SA | BBVA Banco vs. Itau Unibanco Banco |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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