Correlation Between Fifth Third and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Fifth Third 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 Fifth Third and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fifth Third Bancorp and Banco Santander Brasil, you can compare the effects of market volatilities on Fifth Third 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 Fifth Third with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Banco Santander.
Diversification Opportunities for Fifth Third and Banco Santander
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fifth and Banco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp 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 Fifth Third 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 Fifth Third Bancorp 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 Fifth Third i.e., Fifth Third and Banco Santander go up and down completely randomly.
Pair Corralation between Fifth Third and Banco Santander
Given the investment horizon of 90 days Fifth Third Bancorp is expected to under-perform the Banco Santander. But the stock apears to be less risky and, when comparing its historical volatility, Fifth Third Bancorp is 1.88 times less risky than Banco Santander. The stock trades about -0.02 of its potential returns per unit of risk. The Banco Santander Brasil is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 420.00 in Banco Santander Brasil on November 18, 2024 and sell it today you would earn a total of 52.00 from holding Banco Santander Brasil or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Banco Santander Brasil
Performance |
| Timeline |
| Fifth Third Bancorp |
| Banco Santander Brasil |
Fifth Third and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Banco Santander
The main advantage of trading using opposite Fifth Third and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third 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.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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