Correlation Between Banco Santander and Grupo Financiero
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Grupo Financiero 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 Grupo Financiero 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 Grupo Financiero Galicia, you can compare the effects of market volatilities on Banco Santander and Grupo Financiero 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 Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Grupo Financiero.
Diversification Opportunities for Banco Santander and Grupo Financiero
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banco and Grupo is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Galicia has no effect on the direction of Banco Santander i.e., Banco Santander and Grupo Financiero go up and down completely randomly.
Pair Corralation between Banco Santander and Grupo Financiero
Given the investment horizon of 90 days Banco Santander is expected to generate 1.32 times less return on investment than Grupo Financiero. But when comparing it to its historical volatility, Banco Santander Brasil is 1.79 times less risky than Grupo Financiero. It trades about 0.24 of its potential returns per unit of risk. Grupo Financiero Galicia is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,311 in Grupo Financiero Galicia on October 23, 2024 and sell it today you would earn a total of 705.00 from holding Grupo Financiero Galicia or generate 11.17% 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. Grupo Financiero Galicia
Performance |
| Timeline |
| Banco Santander Brasil |
| Grupo Financiero Galicia |
Banco Santander and Grupo Financiero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Grupo Financiero
The main advantage of trading using opposite Banco Santander and Grupo Financiero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Grupo Financiero 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 Grupo Financiero will offset losses from the drop in Grupo Financiero'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 |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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