Correlation Between Verizon Communications and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Verizon Communications 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 Verizon Communications and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Banco Santander Chile, you can compare the effects of market volatilities on Verizon Communications 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 Verizon Communications with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Banco Santander.
Diversification Opportunities for Verizon Communications and Banco Santander
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Verizon and Banco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications 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 Verizon Communications 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 Verizon Communications 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 Verizon Communications i.e., Verizon Communications and Banco Santander go up and down completely randomly.
Pair Corralation between Verizon Communications and Banco Santander
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the Banco Santander. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 1.01 times less risky than Banco Santander. The stock trades about -0.2 of its potential returns per unit of risk. The Banco Santander Chile is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,790 in Banco Santander Chile on October 24, 2024 and sell it today you would earn a total of 94.00 from holding Banco Santander Chile or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Banco Santander Chile
Performance |
| Timeline |
| Verizon Communications |
| Banco Santander Chile |
Verizon Communications and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Banco Santander
The main advantage of trading using opposite Verizon Communications and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications 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.| Verizon Communications vs. Capital One Financial | Verizon Communications vs. British American Tobacco | Verizon Communications vs. Elevance Health, | Verizon Communications vs. STMicroelectronics NV |
| Banco Santander vs. Global X Funds | Banco Santander vs. Clover Health Investments, | Banco Santander vs. Omega Healthcare Investors, | Banco Santander vs. HCA Healthcare, |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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