Correlation Between Bill and BANCO

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

By analyzing existing cross correlation between Bill Com Holdings and BANCO SANTANDER SA, you can compare the effects of market volatilities on Bill and BANCO 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 Bill with a short position of BANCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bill and BANCO.

Diversification Opportunities for Bill and BANCO

-0.32

Correlation Coefficient

Bill  BANCO

Very good diversification

The 3 months correlation between Bill and BANCO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and BANCO SANTANDER SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER SA and Bill 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 Bill Com Holdings are associated (or correlated) with BANCO. 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 SA has no effect on the direction of Bill i.e., Bill and BANCO go up and down completely randomly.

Pair Corralation between Bill and BANCO

Given the investment horizon of 90 days Bill Com Holdings is not expected to generate positive returns. However, Bill Com Holdings is 13.06 times less risky than BANCO. It waists most of its returns potential to compensate for thr risk taken. BANCO is generating about 0.04 per unit of risk. If you would invest  8,201  in BANCO SANTANDER SA on October 24, 2024 and sell it today you would earn a total of  401.00  from holding BANCO SANTANDER SA or generate 4.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.28%
Values	Daily Returns

Bill Com Holdings  vs.  BANCO SANTANDER SA

Bill Com Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

BANCO SANTANDER SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANCO SANTANDER SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bill and BANCO

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

The idea behind Bill Com Holdings and BANCO SANTANDER 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.