Correlation Between US Bancorp and Banco Santander
Can any of the company-specific risk be diversified away by investing in both US Bancorp 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 US Bancorp and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Banco Santander Brasil, you can compare the effects of market volatilities on US Bancorp 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 US Bancorp with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Banco Santander.
Diversification Opportunities for US Bancorp and Banco Santander
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between USB-PH and Banco is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Banco Santander Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Brasil and US Bancorp 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 US Bancorp 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 Brasil has no effect on the direction of US Bancorp i.e., US Bancorp and Banco Santander go up and down completely randomly.
Pair Corralation between US Bancorp and Banco Santander
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.34 times more return on investment than Banco Santander. However, US Bancorp is 2.96 times less risky than Banco Santander. It trades about 0.09 of its potential returns per unit of risk. Banco Santander Brasil is currently generating about -0.02 per unit of risk. If you would invest 1,957 in US Bancorp on November 9, 2024 and sell it today you would earn a total of 316.00 from holding US Bancorp or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Bancorp vs. Banco Santander Brasil
Performance |
| Timeline |
| US Bancorp |
| Banco Santander Brasil |
US Bancorp and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Banco Santander
The main advantage of trading using opposite US Bancorp and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp 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.| US Bancorp vs. US Bancorp PERP | US Bancorp vs. KeyCorp | US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial |
| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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