Correlation Between HDFC Bank and Banco Santander
Can any of the company-specific risk be diversified away by investing in both HDFC Bank 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 HDFC Bank and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HDFC Bank Limited and Banco Santander SA, you can compare the effects of market volatilities on HDFC Bank 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 HDFC Bank with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and Banco Santander.
Diversification Opportunities for HDFC Bank and Banco Santander
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between HDFC and Banco is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and HDFC Bank 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 HDFC Bank Limited 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 SA has no effect on the direction of HDFC Bank i.e., HDFC Bank and Banco Santander go up and down completely randomly.
Pair Corralation between HDFC Bank and Banco Santander
Assuming the 90 days trading horizon HDFC Bank Limited is expected to under-perform the Banco Santander. But the stock apears to be less risky and, when comparing its historical volatility, HDFC Bank Limited is 1.22 times less risky than Banco Santander. The stock trades about -0.26 of its potential returns per unit of risk. The Banco Santander SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,754 in Banco Santander SA on November 3, 2024 and sell it today you would earn a total of 207.00 from holding Banco Santander SA or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HDFC Bank Limited vs. Banco Santander SA
Performance |
| Timeline |
| HDFC Bank Limited |
| Banco Santander SA |
HDFC Bank and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HDFC Bank and Banco Santander
The main advantage of trading using opposite HDFC Bank and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank 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.| HDFC Bank vs. Charter Communications | HDFC Bank vs. Synchrony Financial | HDFC Bank vs. Lloyds Banking Group | HDFC Bank vs. Jefferies Financial Group |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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