Correlation Between Bolsas Y and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Bolsas Y and Banco Santander 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 Bolsas Y and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bolsas y Mercados and Banco Santander Brasil, you can compare the effects of market volatilities on Bolsas Y and Banco Santander 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 Bolsas Y with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolsas Y and Banco Santander.
Diversification Opportunities for Bolsas Y and Banco Santander
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bolsas and Banco is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bolsas y Mercados and Banco Santander Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Brasil and Bolsas Y 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 Bolsas y Mercados are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander Brasil has no effect on the direction of Bolsas Y i.e., Bolsas Y and Banco Santander go up and down completely randomly.
Pair Corralation between Bolsas Y and Banco Santander
Assuming the 90 days trading horizon Bolsas Y is expected to generate 1.02 times less return on investment than Banco Santander. In addition to that, Bolsas Y is 1.64 times more volatile than Banco Santander Brasil. It trades about 0.14 of its total potential returns per unit of risk. Banco Santander Brasil is currently generating about 0.24 per unit of volatility. If you would invest 445,000 in Banco Santander Brasil on October 20, 2024 and sell it today you would earn a total of 48,000 from holding Banco Santander Brasil or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Bolsas y Mercados vs. Banco Santander Brasil
Performance |
| Timeline |
| Bolsas y Mercados |
| Banco Santander Brasil |
Bolsas Y and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bolsas Y and Banco Santander
The main advantage of trading using opposite Bolsas Y and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bolsas Y position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| Bolsas Y vs. Walmart | Bolsas Y vs. Ledesma SAAI | Bolsas Y vs. BBVA Banco Frances | Bolsas Y vs. Transportadora de Gas |
| Banco Santander vs. Banco Bradesco DRC | Banco Santander vs. Grupo Financiero Galicia | Banco Santander vs. Banco Santander Ro | Banco Santander vs. Central Puerto SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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