Correlation Between Banco Santander and Banco Do
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Banco Do 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 Banco Do 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 Banco Do Brasil, you can compare the effects of market volatilities on Banco Santander and Banco Do 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 Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Banco Do.
Diversification Opportunities for Banco Santander and Banco Do
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Banco and Banco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Banco Do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Do Brasil 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 Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Do Brasil has no effect on the direction of Banco Santander i.e., Banco Santander and Banco Do go up and down completely randomly.
Pair Corralation between Banco Santander and Banco Do
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Banco Do. In addition to that, Banco Santander is 1.25 times more volatile than Banco Do Brasil. It trades about -0.22 of its total potential returns per unit of risk. Banco Do Brasil is currently generating about -0.14 per unit of volatility. If you would invest 462.00 in Banco Do Brasil on August 27, 2024 and sell it today you would lose (22.00) from holding Banco Do Brasil or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. Banco Do Brasil
Performance |
| Timeline |
| Banco Santander Brasil |
| Banco Do Brasil |
Banco Santander and Banco Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Banco Do
The main advantage of trading using opposite Banco Santander and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Banco Do 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 Banco Do will offset losses from the drop in Banco Do'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 |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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