Correlation Between Basic Materials and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Basic Materials 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 Basic Materials and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Banco Santander SA, you can compare the effects of market volatilities on Basic Materials 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 Basic Materials with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Banco Santander.
Diversification Opportunities for Basic Materials and Banco Santander
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Basic and Banco is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials 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 Basic Materials 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 Basic Materials 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 Basic Materials i.e., Basic Materials and Banco Santander go up and down completely randomly.
Pair Corralation between Basic Materials and Banco Santander
Assuming the 90 days trading horizon Basic Materials is expected to generate 2.5 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Basic Materials is 2.29 times less risky than Banco Santander. It trades about 0.14 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,660 in Banco Santander SA on December 27, 2024 and sell it today you would earn a total of 276.00 from holding Banco Santander SA or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Basic Materials vs. Banco Santander SA
Performance |
| Timeline |
Basic Materials and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Banco Santander SA
Pair trading matchups for Banco Santander
Pair Trading with Basic Materials and Banco Santander
The main advantage of trading using opposite Basic Materials and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials 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.| Basic Materials vs. Telecomunicaes Brasileiras SA | Basic Materials vs. Omega Healthcare Investors, | Basic Materials vs. Applied Materials, | Basic Materials vs. UnitedHealth Group Incorporated |
| Banco Santander vs. Verizon Communications | Banco Santander vs. Liberty Broadband | Banco Santander vs. Fresenius Medical Care | Banco Santander vs. Datadog, |
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.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |