Correlation Between Royal Bank and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Royal Bank 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 Royal Bank and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Banco Santander SA, you can compare the effects of market volatilities on Royal Bank 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 Royal Bank with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Banco Santander.
Diversification Opportunities for Royal Bank and Banco Santander
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Royal and Banco is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of 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 Royal Bank 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 Royal Bank of 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 Royal Bank i.e., Royal Bank and Banco Santander go up and down completely randomly.
Pair Corralation between Royal Bank and Banco Santander
Allowing for the 90-day total investment horizon Royal Bank is expected to generate 5.69 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Royal Bank of is 4.75 times less risky than Banco Santander. It trades about 0.05 of its potential returns per unit of risk. Banco Santander SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 337.00 in Banco Santander SA on November 9, 2024 and sell it today you would earn a total of 233.00 from holding Banco Santander SA or generate 69.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 59.63% |
| Values | Daily Returns |
Royal Bank of vs. Banco Santander SA
Performance |
| Timeline |
| Royal Bank |
| Banco Santander SA |
Royal Bank and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Banco Santander
The main advantage of trading using opposite Royal Bank and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank 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.| Royal Bank vs. Canadian Imperial Bank | Royal Bank vs. Bank of Montreal | Royal Bank vs. Bank of Nova | Royal Bank vs. Bank of America |
| Banco Santander vs. Banco Bilbao Viscaya | Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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