Correlation Between Banco Santander and Eastern Bankshares
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Eastern Bankshares 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 Eastern Bankshares 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 Eastern Bankshares, you can compare the effects of market volatilities on Banco Santander and Eastern Bankshares 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 Eastern Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Eastern Bankshares.
Diversification Opportunities for Banco Santander and Eastern Bankshares
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Banco and Eastern is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Eastern Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Bankshares 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 Eastern Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Bankshares has no effect on the direction of Banco Santander i.e., Banco Santander and Eastern Bankshares go up and down completely randomly.
Pair Corralation between Banco Santander and Eastern Bankshares
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Eastern Bankshares. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.06 times less risky than Eastern Bankshares. The stock trades about -0.09 of its potential returns per unit of risk. The Eastern Bankshares is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,662 in Eastern Bankshares on November 2, 2024 and sell it today you would earn a total of 183.00 from holding Eastern Bankshares or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. Eastern Bankshares
Performance |
| Timeline |
| Banco Santander Brasil |
| Eastern Bankshares |
Banco Santander and Eastern Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Eastern Bankshares
The main advantage of trading using opposite Banco Santander and Eastern Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Eastern Bankshares 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 Eastern Bankshares will offset losses from the drop in Eastern Bankshares' long position.| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
| Eastern Bankshares vs. Western New England | Eastern Bankshares vs. Northeast Community Bancorp | Eastern Bankshares vs. Independent Bank | Eastern Bankshares vs. The First Bancshares, |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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