Correlation Between Banco Santander and Foreign Trade
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Foreign Trade 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 Foreign Trade 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 Foreign Trade Bank, you can compare the effects of market volatilities on Banco Santander and Foreign Trade 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 Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Foreign Trade.
Diversification Opportunities for Banco Santander and Foreign Trade
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Foreign is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Foreign Trade Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade 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 Brasil are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Bank has no effect on the direction of Banco Santander i.e., Banco Santander and Foreign Trade go up and down completely randomly.
Pair Corralation between Banco Santander and Foreign Trade
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Foreign Trade. In addition to that, Banco Santander is 1.16 times more volatile than Foreign Trade Bank. It trades about -0.26 of its total potential returns per unit of risk. Foreign Trade Bank is currently generating about 0.11 per unit of volatility. If you would invest 3,262 in Foreign Trade Bank on August 27, 2024 and sell it today you would earn a total of 122.00 from holding Foreign Trade Bank or generate 3.74% 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. Foreign Trade Bank
Performance |
| Timeline |
| Banco Santander Brasil |
| Foreign Trade Bank |
Banco Santander and Foreign Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Foreign Trade
The main advantage of trading using opposite Banco Santander and Foreign Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Foreign Trade 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 Foreign Trade will offset losses from the drop in Foreign Trade'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 |
| Foreign Trade vs. Banco Santander Chile | Foreign Trade vs. Bancolombia SA ADR | Foreign Trade vs. Banco Bradesco SA | Foreign Trade vs. Credicorp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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