Correlation Between Banco Santander and Banco Do
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Banco Do 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 Banco Do 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 Banco do Estado, you can compare the effects of market volatilities on Banco Santander and Banco Do 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 Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Banco Do.
Diversification Opportunities for Banco Santander and Banco Do
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banco and Banco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Banco do Estado in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco do Estado 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 Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco do Estado has no effect on the direction of Banco Santander i.e., Banco Santander and Banco Do go up and down completely randomly.
Pair Corralation between Banco Santander and Banco Do
Assuming the 90 days trading horizon Banco Santander SA is expected to generate 0.8 times more return on investment than Banco Do. However, Banco Santander SA is 1.25 times less risky than Banco Do. It trades about -0.12 of its potential returns per unit of risk. Banco do Estado is currently generating about -0.12 per unit of risk. If you would invest 1,392 in Banco Santander SA on September 12, 2024 and sell it today you would lose (57.00) from holding Banco Santander SA or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander SA vs. Banco do Estado
Performance |
| Timeline |
| Banco Santander SA |
| Banco do Estado |
Banco Santander and Banco Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Banco Do
The main advantage of trading using opposite Banco Santander and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Banco Do 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 Do will offset losses from the drop in Banco Do's long position.| Banco Santander vs. Banco Santander SA | Banco Santander vs. Transmissora Aliana de | Banco Santander vs. Klabin SA | Banco Santander vs. CTEEP Companhia |
| Banco Do vs. Ita Unibanco Holding | Banco Do vs. Banco do Brasil | Banco Do vs. Itasa Investimentos | Banco Do vs. Petrleo Brasileiro 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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