Correlation Between Walmart and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Banco Santander Brasil, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Banco Santander.
Diversification Opportunities for Walmart and Banco Santander
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Banco is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Walmart 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 Walmart 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 Walmart 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 Walmart i.e., Walmart and Banco Santander go up and down completely randomly.
Pair Corralation between Walmart and Banco Santander
Assuming the 90 days trading horizon Walmart is expected to generate 5.92 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Walmart is 1.74 times less risky than Banco Santander. It trades about 0.07 of its potential returns per unit of risk. Banco Santander Brasil is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 445,000 in Banco Santander Brasil on October 20, 2024 and sell it today you would earn a total of 48,000 from holding Banco Santander Brasil or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Banco Santander Brasil
Performance |
| Timeline |
| Walmart |
| Banco Santander Brasil |
Walmart and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Banco Santander
The main advantage of trading using opposite Walmart and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. United States Steel | Walmart vs. Telecom Argentina | Walmart vs. Transportadora de Gas | Walmart vs. Agrometal SAI |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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