Correlation Between Banco Santander and Heritage Commerce
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Heritage Commerce 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 Heritage Commerce 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 Heritage Commerce Corp, you can compare the effects of market volatilities on Banco Santander and Heritage Commerce 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 Heritage Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Heritage Commerce.
Diversification Opportunities for Banco Santander and Heritage Commerce
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and Heritage is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Heritage Commerce Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Commerce Corp 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 Heritage Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Commerce Corp has no effect on the direction of Banco Santander i.e., Banco Santander and Heritage Commerce go up and down completely randomly.
Pair Corralation between Banco Santander and Heritage Commerce
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Heritage Commerce. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.52 times less risky than Heritage Commerce. The stock trades about -0.27 of its potential returns per unit of risk. The Heritage Commerce Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 959.00 in Heritage Commerce Corp on September 1, 2024 and sell it today you would earn a total of 103.00 from holding Heritage Commerce Corp or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. Heritage Commerce Corp
Performance |
| Timeline |
| Banco Santander Brasil |
| Heritage Commerce Corp |
Banco Santander and Heritage Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Heritage Commerce
The main advantage of trading using opposite Banco Santander and Heritage Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Heritage Commerce 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 Heritage Commerce will offset losses from the drop in Heritage Commerce'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 |
| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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