Correlation Between Great Southern and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Great Southern 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 Great Southern and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Southern Bancorp and Banco Santander Chile, you can compare the effects of market volatilities on Great Southern 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 Great Southern with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Banco Santander.
Diversification Opportunities for Great Southern and Banco Santander
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Great and Banco is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Banco Santander Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Chile and Great Southern 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 Great Southern 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 Chile has no effect on the direction of Great Southern i.e., Great Southern and Banco Santander go up and down completely randomly.
Pair Corralation between Great Southern and Banco Santander
Given the investment horizon of 90 days Great Southern Bancorp is expected to generate 2.99 times more return on investment than Banco Santander. However, Great Southern is 2.99 times more volatile than Banco Santander Chile. It trades about 0.19 of its potential returns per unit of risk. Banco Santander Chile is currently generating about -0.12 per unit of risk. If you would invest 5,666 in Great Southern Bancorp on September 4, 2024 and sell it today you would earn a total of 769.00 from holding Great Southern Bancorp or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. Banco Santander Chile
Performance |
| Timeline |
| Great Southern Bancorp |
| Banco Santander Chile |
Great Southern and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Banco Santander
The main advantage of trading using opposite Great Southern and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern 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.| Great Southern vs. International Bancshares | Great Southern vs. Finward Bancorp | Great Southern vs. Aquagold International | Great Southern vs. Thrivent High Yield |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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