Correlation Between William Penn and Banco Santander

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Can any of the company-specific risk be diversified away by investing in both William Penn 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 William Penn and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between William Penn Bancorp and Banco Santander Chile, you can compare the effects of market volatilities on William Penn 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 William Penn with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and Banco Santander.

Diversification Opportunities for William Penn and Banco Santander

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between William and Banco is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp 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 William Penn 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 William Penn 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 Chile has no effect on the direction of William Penn i.e., William Penn and Banco Santander go up and down completely randomly.

Pair Corralation between William Penn and Banco Santander

Given the investment horizon of 90 days William Penn Bancorp is expected to generate 1.08 times more return on investment than Banco Santander. However, William Penn is 1.08 times more volatile than Banco Santander Chile. It trades about 0.17 of its potential returns per unit of risk. Banco Santander Chile is currently generating about -0.18 per unit of risk. If you would invest  1,232  in William Penn Bancorp on August 24, 2024 and sell it today you would earn a total of  70.00  from holding William Penn Bancorp or generate 5.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

William Penn Bancorp  vs.  Banco Santander Chile

 Performance 
       Timeline  
William Penn Bancorp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in William Penn Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, William Penn may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Banco Santander Chile 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Banco Santander Chile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Banco Santander is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

William Penn and Banco Santander Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with William Penn and Banco Santander

The main advantage of trading using opposite William Penn and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn 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.
The idea behind William Penn Bancorp and Banco Santander Chile 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.
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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