Correlation Between Auburn National and Banco Santander

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

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

Diversification Opportunities for Auburn National and Banco Santander

-0.84

Correlation Coefficient

Auburn National  Banco Santander

Pay attention - limited upside

The 3 months correlation between Auburn and Banco is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. 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 Auburn National 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 Auburn National Bancorporation 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 Auburn National i.e., Auburn National and Banco Santander go up and down completely randomly.

Pair Corralation between Auburn National and Banco Santander

Given the investment horizon of 90 days Auburn National Bancorporation is expected to under-perform the Banco Santander. But the stock apears to be less risky and, when comparing its historical volatility, Auburn National Bancorporation is 1.15 times less risky than Banco Santander. The stock trades about -0.08 of its potential returns per unit of risk. The Banco Santander Brasil is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  402.00  in Banco Santander Brasil on December 20, 2024 and sell it today you would earn a total of  82.00  from holding Banco Santander Brasil or generate 20.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Auburn National Bancorp.  vs.  Banco Santander Brasil

Auburn National Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auburn National Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Banco Santander Brasil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Brasil are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Banco Santander reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auburn National and Banco Santander

The main advantage of trading using opposite Auburn National and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National 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 Auburn National Bancorporation and Banco Santander Brasil 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.