Correlation Between Banco Santander and CMUV Bancorp

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

Diversification Opportunities for Banco Santander and CMUV Bancorp

0.0

Correlation Coefficient

Banco Santander  CMUV Bancorp

Pay attention - limited upside

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

Pair Corralation between Banco Santander and CMUV Bancorp

If you would invest  1,486  in CMUV Bancorp on October 26, 2024 and sell it today you would earn a total of  764.00  from holding CMUV Bancorp or generate 51.41% 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.  CMUV Bancorp

Banco Santander Mxico

Risk-Adjusted Performance

0 of 100

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.

CMUV Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CMUV Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, CMUV Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Santander and CMUV Bancorp

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

The idea behind Banco Santander Mxico and CMUV Bancorp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.