Correlation Between Apple and Banco Santander

Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Banco Santander Chile, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Banco Santander.

Diversification Opportunities for Apple and Banco Santander

0.52

Correlation Coefficient

Apple  Banco Santander

Very weak diversification

The 3 months correlation between Apple and Banco is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Banco Santander go up and down completely randomly.

Pair Corralation between Apple and Banco Santander

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.96 times more return on investment than Banco Santander. However, Apple Inc is 1.04 times less risky than Banco Santander. It trades about 0.28 of its potential returns per unit of risk. Banco Santander Chile is currently generating about 0.02 per unit of risk. If you would invest  5,940  in Apple Inc on September 16, 2024 and sell it today you would earn a total of  1,575  from holding Apple Inc or generate 26.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  Banco Santander Chile

Apple Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Banco Santander Chile

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Chile are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Banco Santander is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and Banco Santander

The main advantage of trading using opposite Apple and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.