Correlation Between Banco Santander and Energisa

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

Diversification Opportunities for Banco Santander and Energisa

0.59

Correlation Coefficient

Banco Santander  Energisa

Very weak diversification

The 3 months correlation between Banco and Energisa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA 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 Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Banco Santander i.e., Banco Santander and Energisa go up and down completely randomly.

Pair Corralation between Banco Santander and Energisa

Assuming the 90 days trading horizon Banco Santander Chile is expected to generate 0.35 times more return on investment than Energisa. However, Banco Santander Chile is 2.86 times less risky than Energisa. It trades about 0.15 of its potential returns per unit of risk. Energisa SA is currently generating about 0.02 per unit of risk. If you would invest  5,762  in Banco Santander Chile on December 4, 2024 and sell it today you would earn a total of  628.00  from holding Banco Santander Chile or generate 10.9% return on investment over 90 days.

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

Banco Santander Chile  vs.  Energisa SA

Banco Santander Chile

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Chile are ranked lower than 12 (%) 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 April 2025.

Energisa SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Energisa is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Banco Santander and Energisa

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

The idea behind Banco Santander Chile and Energisa SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.