Correlation Between Banco Santander and New York

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

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

Diversification Opportunities for Banco Santander and New York

-0.17

Correlation Coefficient

Banco Santander  New York

Good diversification

The 3 months correlation between Banco and New is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and New York Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Community 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 Chile are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Community has no effect on the direction of Banco Santander i.e., Banco Santander and New York go up and down completely randomly.

Pair Corralation between Banco Santander and New York

Given the investment horizon of 90 days Banco Santander Chile is expected to under-perform the New York. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 2.61 times less risky than New York. The stock trades about -0.07 of its potential returns per unit of risk. The New York Community is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,050  in New York Community on September 2, 2024 and sell it today you would earn a total of  31.00  from holding New York Community or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

Banco Santander Chile  vs.  New York Community

Banco Santander Chile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander Chile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

New York Community

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days New York Community has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak fundamental indicators, New York may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Banco Santander and New York

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

The idea behind Banco Santander Chile and New York Community 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.

Check out your portfolio center.

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.