Correlation Between Banco Santander and Banco Hipotecario

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

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

Diversification Opportunities for Banco Santander and Banco Hipotecario

0.0

Correlation Coefficient

Banco Santander  Banco Hipotecario

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 Santander Ro and Banco Hipotecario SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Hipotecario 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 Ro are associated (or correlated) with Banco Hipotecario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Hipotecario has no effect on the direction of Banco Santander i.e., Banco Santander and Banco Hipotecario go up and down completely randomly.

Pair Corralation between Banco Santander and Banco Hipotecario

If you would invest  3,350  in Banco Santander Ro on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Banco Santander Ro or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Banco Santander Ro  vs.  Banco Hipotecario SA

Banco Santander Ro

Risk-Adjusted Performance

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.

Banco Hipotecario

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Hipotecario SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Banco Santander and Banco Hipotecario

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

The idea behind Banco Santander Ro and Banco Hipotecario 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.