Correlation Between Banco Santander and Caixabank

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

By analyzing existing cross correlation between Banco Santander Mxico and Caixabank SA ADR, you can compare the effects of market volatilities on Banco Santander and Caixabank 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 Caixabank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Caixabank.

Diversification Opportunities for Banco Santander and Caixabank

0.0

Correlation Coefficient

Banco Santander  Caixabank

Pay attention - limited upside

The 3 months correlation between Banco and Caixabank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Mxico and Caixabank SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank SA ADR 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 Mxico are associated (or correlated) with Caixabank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixabank SA ADR has no effect on the direction of Banco Santander i.e., Banco Santander and Caixabank go up and down completely randomly.

Pair Corralation between Banco Santander and Caixabank

If you would invest  175.00  in Caixabank SA ADR on December 20, 2024 and sell it today you would earn a total of  94.00  from holding Caixabank SA ADR or generate 53.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Banco Santander Mxico  vs.  Caixabank SA ADR

Banco Santander Mxico

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Santander Mxico has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Banco Santander is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Caixabank SA ADR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Caixabank SA ADR are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caixabank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Santander and Caixabank

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

The idea behind Banco Santander Mxico and Caixabank SA ADR 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.