Correlation Between Wells Fargo and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and Banco Santander Chile, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Banco Santander.
Diversification Opportunities for Wells Fargo and Banco Santander
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wells and Banco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo 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 Wells Fargo 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 Wells Fargo 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 Wells Fargo i.e., Wells Fargo and Banco Santander go up and down completely randomly.
Pair Corralation between Wells Fargo and Banco Santander
Considering the 90-day investment horizon Wells Fargo is expected to generate 2.04 times more return on investment than Banco Santander. However, Wells Fargo is 2.04 times more volatile than Banco Santander Chile. It trades about 0.33 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 5,467 in Wells Fargo on September 3, 2024 and sell it today you would earn a total of 2,150 from holding Wells Fargo or generate 39.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo vs. Banco Santander Chile
Performance |
| Timeline |
| Wells Fargo |
| Banco Santander Chile |
Wells Fargo and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Banco Santander
The main advantage of trading using opposite Wells Fargo and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.| Wells Fargo vs. Partner Communications | Wells Fargo vs. Merck Company | Wells Fargo vs. Western Midstream Partners | Wells Fargo vs. Edgewise Therapeutics |
| Banco Santander vs. JPMorgan Chase Co | Banco Santander vs. Citigroup | Banco Santander vs. Wells Fargo | Banco Santander vs. Toronto Dominion Bank |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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