Correlation Between Livetech and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Livetech 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 Livetech and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livetech da Bahia and Banco Santander Chile, you can compare the effects of market volatilities on Livetech 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 Livetech with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livetech and Banco Santander.
Diversification Opportunities for Livetech and Banco Santander
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Livetech and Banco is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Livetech da Bahia 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 Livetech 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 Livetech da Bahia 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 Livetech i.e., Livetech and Banco Santander go up and down completely randomly.
Pair Corralation between Livetech and Banco Santander
Assuming the 90 days trading horizon Livetech da Bahia is expected to under-perform the Banco Santander. In addition to that, Livetech is 1.9 times more volatile than Banco Santander Chile. It trades about -0.05 of its total potential returns per unit of risk. Banco Santander Chile is currently generating about 0.08 per unit of volatility. If you would invest 5,085 in Banco Santander Chile on September 3, 2024 and sell it today you would earn a total of 700.00 from holding Banco Santander Chile or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Livetech da Bahia vs. Banco Santander Chile
Performance |
| Timeline |
| Livetech da Bahia |
| Banco Santander Chile |
Livetech and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livetech and Banco Santander
The main advantage of trading using opposite Livetech and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livetech 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 Livetech da Bahia 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. Automatic Data Processing | Banco Santander vs. Extra Space Storage | Banco Santander vs. Global X Funds | Banco Santander vs. Sumitomo Mitsui Financial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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