Correlation Between Banco Santander and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Farmers Bancorp 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 Farmers Bancorp 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 Farmers Bancorp, you can compare the effects of market volatilities on Banco Santander and Farmers Bancorp 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 Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Farmers Bancorp.
Diversification Opportunities for Banco Santander and Farmers Bancorp
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Farmers is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp 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 Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of Banco Santander i.e., Banco Santander and Farmers Bancorp go up and down completely randomly.
Pair Corralation between Banco Santander and Farmers Bancorp
Given the investment horizon of 90 days Banco Santander Brasil is expected to generate 1.82 times more return on investment than Farmers Bancorp. However, Banco Santander is 1.82 times more volatile than Farmers Bancorp. It trades about 0.01 of its potential returns per unit of risk. Farmers Bancorp is currently generating about -0.15 per unit of risk. If you would invest 396.00 in Banco Santander Brasil on October 15, 2024 and sell it today you would lose (1.00) from holding Banco Santander Brasil or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. Farmers Bancorp
Performance |
| Timeline |
| Banco Santander Brasil |
| Farmers Bancorp |
Banco Santander and Farmers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Farmers Bancorp
The main advantage of trading using opposite Banco Santander and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Farmers Bancorp 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 Farmers Bancorp will offset losses from the drop in Farmers Bancorp'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 |
| Farmers Bancorp vs. First Farmers Financial | Farmers Bancorp vs. Farmers Merchants Bancorp | Farmers Bancorp vs. Lakeland Financial | Farmers Bancorp vs. Eagle Financial Services |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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