Correlation Between Lupatech and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Lupatech 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 Lupatech and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and Banco Santander Chile, you can compare the effects of market volatilities on Lupatech 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 Lupatech with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Banco Santander.
Diversification Opportunities for Lupatech and Banco Santander
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lupatech and Banco is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA 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 Lupatech 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 Lupatech SA 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 Lupatech i.e., Lupatech and Banco Santander go up and down completely randomly.
Pair Corralation between Lupatech and Banco Santander
Assuming the 90 days trading horizon Lupatech SA is expected to generate 1.95 times more return on investment than Banco Santander. However, Lupatech is 1.95 times more volatile than Banco Santander Chile. It trades about -0.09 of its potential returns per unit of risk. Banco Santander Chile is currently generating about -0.21 per unit of risk. If you would invest 150.00 in Lupatech SA on August 26, 2024 and sell it today you would lose (8.00) from holding Lupatech SA or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lupatech SA vs. Banco Santander Chile
Performance |
| Timeline |
| Lupatech SA |
| Banco Santander Chile |
Lupatech and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and Banco Santander
The main advantage of trading using opposite Lupatech and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech 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.| Lupatech vs. Mitsubishi UFJ Financial | Lupatech vs. Sumitomo Mitsui Financial | Lupatech vs. Toyota Motor | Lupatech vs. Banco Santander Chile |
| Banco Santander vs. Agilent Technologies | Banco Santander vs. United Rentals | Banco Santander vs. Cognizant Technology Solutions | Banco Santander vs. Lupatech SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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