Correlation Between Banestes and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Banestes 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 Banestes and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banestes SA and Banco Santander SA, you can compare the effects of market volatilities on Banestes 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 Banestes with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banestes and Banco Santander.
Diversification Opportunities for Banestes and Banco Santander
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Banestes and Banco is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Banestes SA and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and Banestes 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 Banestes SA 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 SA has no effect on the direction of Banestes i.e., Banestes and Banco Santander go up and down completely randomly.
Pair Corralation between Banestes and Banco Santander
Assuming the 90 days trading horizon Banestes SA is expected to under-perform the Banco Santander. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banestes SA is 1.74 times less risky than Banco Santander. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Banco Santander SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,254 in Banco Santander SA on February 14, 2024 and sell it today you would earn a total of 88.00 from holding Banco Santander SA or generate 7.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Banestes SA vs. Banco Santander SA
Performance |
Timeline |
Banestes SA |
Banco Santander SA |
Banestes and Banco Santander Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banestes and Banco Santander
The main advantage of trading using opposite Banestes and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banestes 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.Banestes vs. Banco Santander SA | Banestes vs. Itasa Investimentos | Banestes vs. Banco do Estado | Banestes vs. Banco da Amaznia |
Banco Santander vs. Banco Alfa de | Banco Santander vs. Banestes SA | Banco Santander vs. Banco da Amaznia | Banco Santander vs. Financeira Alfa SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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