Correlation Between Banco Santander and Caixabank
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Caixabank 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 Banco Santander and Caixabank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander and Caixabank SA, you can compare the effects of market volatilities on Banco Santander and Caixabank 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 Banco Santander with a short position of Caixabank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Caixabank.
Diversification Opportunities for Banco Santander and Caixabank
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Caixabank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander and Caixabank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank SA and Banco Santander 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 Banco Santander are associated (or correlated) with Caixabank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixabank SA has no effect on the direction of Banco Santander i.e., Banco Santander and Caixabank go up and down completely randomly.
Pair Corralation between Banco Santander and Caixabank
Assuming the 90 days trading horizon Banco Santander is expected to generate 0.97 times more return on investment than Caixabank. However, Banco Santander is 1.03 times less risky than Caixabank. It trades about -0.03 of its potential returns per unit of risk. Caixabank SA is currently generating about -0.08 per unit of risk. If you would invest 453.00 in Banco Santander on August 28, 2024 and sell it today you would lose (9.00) from holding Banco Santander or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander vs. Caixabank SA
Performance |
| Timeline |
| Banco Santander |
| Caixabank SA |
Banco Santander and Caixabank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Caixabank
The main advantage of trading using opposite Banco Santander and Caixabank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Caixabank 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 Caixabank will offset losses from the drop in Caixabank's long position.| Banco Santander vs. Repsol | Banco Santander vs. Iberdrola SA | Banco Santander vs. Banco de Sabadell | Banco Santander vs. Caixabank SA |
| Caixabank vs. Banco de Sabadell | Caixabank vs. Banco Santander | Caixabank vs. Bankinter | Caixabank vs. Repsol |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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