Correlation Between Banco Santander and Check Point

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

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

Diversification Opportunities for Banco Santander and Check Point

0.35

Correlation Coefficient

Banco Santander  Check Point

Weak diversification

The 3 months correlation between Banco and Check is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software and Banco Santander 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 Banco Santander Chile are associated (or correlated) with Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Banco Santander i.e., Banco Santander and Check Point go up and down completely randomly.

Pair Corralation between Banco Santander and Check Point

Assuming the 90 days trading horizon Banco Santander Chile is expected to under-perform the Check Point. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 2.55 times less risky than Check Point. The stock trades about -0.07 of its potential returns per unit of risk. The Check Point Software is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  50,796  in Check Point Software on October 6, 2024 and sell it today you would earn a total of  7,958  from holding Check Point Software or generate 15.67% return on investment over 90 days.

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

Banco Santander Chile  vs.  Check Point Software

Banco Santander Chile

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Chile are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Banco Santander may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Check Point Software

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Check Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Santander and Check Point

The main advantage of trading using opposite Banco Santander and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.

The idea behind Banco Santander Chile and Check Point Software 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.