Correlation Between Banco Hipotecario and Banco Santander

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

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

Diversification Opportunities for Banco Hipotecario and Banco Santander

0.0

Correlation Coefficient

Banco Hipotecario  Banco Santander

Pay attention - limited upside

The 3 months correlation between Banco and Banco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco Hipotecario SA and Banco Santander Ro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Ro and Banco Hipotecario 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 Hipotecario SA 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 Ro has no effect on the direction of Banco Hipotecario i.e., Banco Hipotecario and Banco Santander go up and down completely randomly.

Pair Corralation between Banco Hipotecario and Banco Santander

If you would invest  2,525  in Banco Hipotecario SA on October 10, 2024 and sell it today you would earn a total of  59,875  from holding Banco Hipotecario SA or generate 2371.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

Banco Hipotecario SA  vs.  Banco Santander Ro

Banco Hipotecario

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Hipotecario SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Banco Hipotecario sustained solid returns over the last few months and may actually be approaching a breakup point.

Banco Santander Ro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander Ro has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Banco Hipotecario and Banco Santander

The main advantage of trading using opposite Banco Hipotecario and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Hipotecario 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 Banco Hipotecario SA and Banco Santander Ro 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.