Correlation Between Tres Tentos and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Tres Tentos and Banco Santander 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 Tres Tentos and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tres Tentos Agroindustrial and Banco Santander Chile, you can compare the effects of market volatilities on Tres Tentos and Banco Santander 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 Tres Tentos with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tres Tentos and Banco Santander.
Diversification Opportunities for Tres Tentos and Banco Santander
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tres and Banco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tres Tentos Agroindustrial and Banco Santander Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Chile and Tres Tentos 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 Tres Tentos Agroindustrial are associated (or correlated) with Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander Chile has no effect on the direction of Tres Tentos i.e., Tres Tentos and Banco Santander go up and down completely randomly.
Pair Corralation between Tres Tentos and Banco Santander
Assuming the 90 days trading horizon Tres Tentos Agroindustrial is expected to generate 1.5 times more return on investment than Banco Santander. However, Tres Tentos is 1.5 times more volatile than Banco Santander Chile. It trades about 0.05 of its potential returns per unit of risk. Banco Santander Chile is currently generating about 0.06 per unit of risk. If you would invest 904.00 in Tres Tentos Agroindustrial on September 15, 2024 and sell it today you would earn a total of 583.00 from holding Tres Tentos Agroindustrial or generate 64.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Tres Tentos Agroindustrial vs. Banco Santander Chile
Performance |
| Timeline |
| Tres Tentos Agroindu |
| Banco Santander Chile |
Tres Tentos and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tres Tentos and Banco Santander
The main advantage of trading using opposite Tres Tentos and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tres Tentos position performs unexpectedly, Banco Santander 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 Santander will offset losses from the drop in Banco Santander's long position.| Tres Tentos vs. Boa Safra Sementes | Tres Tentos vs. Ambipar Participaes e | Tres Tentos vs. Vamos Locao de | Tres Tentos vs. Petroreconcavo SA |
| Banco Santander vs. Cognizant Technology Solutions | Banco Santander vs. Southwest Airlines Co | Banco Santander vs. Take Two Interactive Software | Banco Santander vs. Tres Tentos Agroindustrial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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