Correlation Between Honda and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Honda 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 Honda and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honda Motor Co and Banco Santander Chile, you can compare the effects of market volatilities on Honda 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 Honda with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honda and Banco Santander.
Diversification Opportunities for Honda and Banco Santander
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Honda and Banco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Honda Motor Co 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 Honda 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 Honda Motor Co 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 Honda i.e., Honda and Banco Santander go up and down completely randomly.
Pair Corralation between Honda and Banco Santander
Assuming the 90 days trading horizon Honda Motor Co is expected to under-perform the Banco Santander. In addition to that, Honda is 1.42 times more volatile than Banco Santander Chile. It trades about -0.16 of its total potential returns per unit of risk. Banco Santander Chile is currently generating about -0.03 per unit of volatility. If you would invest 5,700 in Banco Santander Chile on August 30, 2024 and sell it today you would lose (110.00) from holding Banco Santander Chile or give up 1.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honda Motor Co vs. Banco Santander Chile
Performance |
| Timeline |
| Honda Motor |
| Banco Santander Chile |
Honda and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honda and Banco Santander
The main advantage of trading using opposite Honda and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honda 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.| Honda vs. GP Investments | Honda vs. Align Technology | Honda vs. Apartment Investment and | Honda vs. HDFC Bank Limited |
| Banco Santander vs. Paycom Software | Banco Santander vs. Beyond Meat | Banco Santander vs. Take Two Interactive Software | Banco Santander vs. Hospital Mater Dei |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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