Correlation Between BANCO and United States
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By analyzing existing cross correlation between BANCO SANTANDER SA and United States Steel, you can compare the effects of market volatilities on BANCO and United States 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 with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANCO and United States.
Diversification Opportunities for BANCO and United States
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BANCO and United is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BANCO SANTANDER SA and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and BANCO 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of BANCO i.e., BANCO and United States go up and down completely randomly.
Pair Corralation between BANCO and United States
Assuming the 90 days trading horizon BANCO SANTANDER SA is expected to under-perform the United States. But the bond apears to be less risky and, when comparing its historical volatility, BANCO SANTANDER SA is 4.03 times less risky than United States. The bond trades about -0.32 of its potential returns per unit of risk. The United States Steel is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,137 in United States Steel on October 24, 2024 and sell it today you would earn a total of 467.00 from holding United States Steel or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
BANCO SANTANDER SA vs. United States Steel
Performance |
| Timeline |
| BANCO SANTANDER SA |
| United States Steel |
BANCO and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANCO and United States
The main advantage of trading using opposite BANCO and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANCO position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.The idea behind BANCO SANTANDER SA and United States Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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