Correlation Between Washington Federal and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Washington Federal 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 Washington Federal and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Banco Santander Chile, you can compare the effects of market volatilities on Washington Federal 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 Washington Federal with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Banco Santander.
Diversification Opportunities for Washington Federal and Banco Santander
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Banco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal 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 Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and Banco Santander go up and down completely randomly.
Pair Corralation between Washington Federal and Banco Santander
Assuming the 90 days horizon Washington Federal is expected to under-perform the Banco Santander. In addition to that, Washington Federal is 1.03 times more volatile than Banco Santander Chile. It trades about -0.08 of its total potential returns per unit of risk. Banco Santander Chile is currently generating about -0.03 per unit of volatility. If you would invest 2,046 in Banco Santander Chile on October 25, 2024 and sell it today you would lose (60.00) from holding Banco Santander Chile or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.33% |
| Values | Daily Returns |
Washington Federal vs. Banco Santander Chile
Performance |
| Timeline |
| Washington Federal |
| Banco Santander Chile |
Washington Federal and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Banco Santander
The main advantage of trading using opposite Washington Federal and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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.| Washington Federal vs. Fulton Financial | Washington Federal vs. Texas Capital Bancshares | Washington Federal vs. Huntington Bancshares Incorporated | Washington Federal vs. Wintrust Financial Corp |
| Banco Santander vs. Bancolombia SA ADR | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. Credicorp | Banco Santander vs. Banco Santander Brasil |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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