Correlation Between Banco Santander and CRISPR Therapeutics

Can any of the company-specific risk be diversified away by investing in both Banco Santander and CRISPR Therapeutics 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 CRISPR Therapeutics 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 CRISPR Therapeutics AG, you can compare the effects of market volatilities on Banco Santander and CRISPR Therapeutics 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 CRISPR Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and CRISPR Therapeutics.

Diversification Opportunities for Banco Santander and CRISPR Therapeutics

0.23

Correlation Coefficient

Banco Santander  CRISPR Therapeutics

Modest diversification

The 3 months correlation between Banco and CRISPR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics 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 CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of Banco Santander i.e., Banco Santander and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between Banco Santander and CRISPR Therapeutics

Assuming the 90 days trading horizon Banco Santander Chile is expected to generate 0.33 times more return on investment than CRISPR Therapeutics. However, Banco Santander Chile is 3.06 times less risky than CRISPR Therapeutics. It trades about -0.07 of its potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about -0.24 per unit of risk. If you would invest  5,828  in Banco Santander Chile on October 6, 2024 and sell it today you would lose (94.00) from holding Banco Santander Chile or give up 1.61% of portfolio value over 90 days.

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

Banco Santander Chile  vs.  CRISPR Therapeutics AG

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.

CRISPR Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Banco Santander and CRISPR Therapeutics

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

The idea behind Banco Santander Chile and CRISPR Therapeutics AG 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.