Correlation Between Banco Santander and Echo Investment
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Echo Investment 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 Echo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander SA and Echo Investment SA, you can compare the effects of market volatilities on Banco Santander and Echo Investment 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 Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Echo Investment.
Diversification Opportunities for Banco Santander and Echo Investment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Echo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment 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 SA are associated (or correlated) with Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of Banco Santander i.e., Banco Santander and Echo Investment go up and down completely randomly.
Pair Corralation between Banco Santander and Echo Investment
Assuming the 90 days trading horizon Banco Santander SA is expected to under-perform the Echo Investment. In addition to that, Banco Santander is 1.12 times more volatile than Echo Investment SA. It trades about -0.06 of its total potential returns per unit of risk. Echo Investment SA is currently generating about 0.03 per unit of volatility. If you would invest 440.00 in Echo Investment SA on August 24, 2024 and sell it today you would earn a total of 3.00 from holding Echo Investment SA or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander SA vs. Echo Investment SA
Performance |
| Timeline |
| Banco Santander SA |
| Echo Investment SA |
Banco Santander and Echo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Echo Investment
The main advantage of trading using opposite Banco Santander and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Echo Investment 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 Echo Investment will offset losses from the drop in Echo Investment's long position.| Banco Santander vs. Pixel Crow Games | Banco Santander vs. TEN SQUARE GAMES | Banco Santander vs. Gaming Factory SA | Banco Santander vs. 3R Games SA |
| Echo Investment vs. Poznanska Korporacja Budowlana | Echo Investment vs. Esotiq Henderson SA | Echo Investment vs. Toya SA | Echo Investment vs. Betacom 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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