Correlation Between KeyCorp and Banco Santander
Can any of the company-specific risk be diversified away by investing in both KeyCorp 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 KeyCorp and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Banco Santander Chile, you can compare the effects of market volatilities on KeyCorp 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 KeyCorp with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Banco Santander.
Diversification Opportunities for KeyCorp and Banco Santander
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KeyCorp and Banco is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp 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 KeyCorp 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 KeyCorp 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 KeyCorp i.e., KeyCorp and Banco Santander go up and down completely randomly.
Pair Corralation between KeyCorp and Banco Santander
Assuming the 90 days trading horizon KeyCorp is expected to generate 0.55 times more return on investment than Banco Santander. However, KeyCorp is 1.83 times less risky than Banco Santander. It trades about 0.04 of its potential returns per unit of risk. Banco Santander Chile is currently generating about 0.0 per unit of risk. If you would invest 2,403 in KeyCorp on August 30, 2024 and sell it today you would earn a total of 92.00 from holding KeyCorp or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Banco Santander Chile
Performance |
| Timeline |
| KeyCorp |
| Banco Santander Chile |
KeyCorp and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Banco Santander
The main advantage of trading using opposite KeyCorp and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp 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.The idea behind KeyCorp and Banco Santander Chile pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Banco Santander vs. Bancolombia SA ADR | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. Credicorp | Banco Santander vs. Banco Santander Brasil |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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