Correlation Between Banco Santander and Transportadora
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Banco Santander and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Transportadora.
Diversification Opportunities for Banco Santander and Transportadora
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Banco and Transportadora is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Banco Santander i.e., Banco Santander and Transportadora go up and down completely randomly.
Pair Corralation between Banco Santander and Transportadora
Assuming the 90 days trading horizon Banco Santander SA is not expected to generate positive returns. However, Banco Santander SA is 624.18 times less risky than Transportadora. It waists most of its returns potential to compensate for thr risk taken. Transportadora is generating about 0.14 per unit of risk. If you would invest 59,600 in Transportadora de Gas on September 4, 2024 and sell it today you would earn a total of 584,400 from holding Transportadora de Gas or generate 980.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.18% |
| Values | Daily Returns |
Banco Santander SA vs. Transportadora de Gas
Performance |
| Timeline |
| Banco Santander SA |
| Transportadora de Gas |
Banco Santander and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Transportadora
The main advantage of trading using opposite Banco Santander and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Banco Santander vs. Procter Gamble DRC | Banco Santander vs. Merck Company | Banco Santander vs. Walt Disney | Banco Santander vs. Longvie SA |
| Transportadora vs. Longvie SA | Transportadora vs. United States Steel | Transportadora vs. Capex SA | Transportadora vs. Pfizer Inc |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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