Correlation Between Banco Santander and ABN AMRO
Can any of the company-specific risk be diversified away by investing in both Banco Santander and ABN AMRO 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 ABN AMRO 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 ABN AMRO Bank, you can compare the effects of market volatilities on Banco Santander and ABN AMRO 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 ABN AMRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and ABN AMRO.
Diversification Opportunities for Banco Santander and ABN AMRO
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Banco and ABN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and ABN AMRO Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABN AMRO Bank 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 ABN AMRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABN AMRO Bank has no effect on the direction of Banco Santander i.e., Banco Santander and ABN AMRO go up and down completely randomly.
Pair Corralation between Banco Santander and ABN AMRO
Considering the 90-day investment horizon Banco Santander SA is expected to generate 1.35 times more return on investment than ABN AMRO. However, Banco Santander is 1.35 times more volatile than ABN AMRO Bank. It trades about -0.11 of its potential returns per unit of risk. ABN AMRO Bank is currently generating about -0.22 per unit of risk. If you would invest 486.00 in Banco Santander SA on September 1, 2024 and sell it today you would lose (24.00) from holding Banco Santander SA or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander SA vs. ABN AMRO Bank
Performance |
| Timeline |
| Banco Santander SA |
| ABN AMRO Bank |
Banco Santander and ABN AMRO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and ABN AMRO
The main advantage of trading using opposite Banco Santander and ABN AMRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, ABN AMRO 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 ABN AMRO will offset losses from the drop in ABN AMRO's long position.| Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC | Banco Santander vs. Natwest Group PLC |
| ABN AMRO vs. Barclays PLC | ABN AMRO vs. Bank of America | ABN AMRO vs. Bank of America | ABN AMRO vs. Banco Bilbao Vizcaya |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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