Correlation Between Banco Santander and Zions Bancorporation

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

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

Diversification Opportunities for Banco Santander and Zions Bancorporation

-0.24

Correlation Coefficient

Banco Santander  Zions Bancorporation

Very good diversification

The 3 months correlation between Banco and Zions is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Zions Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation 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 Brasil are associated (or correlated) with Zions Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zions Bancorporation has no effect on the direction of Banco Santander i.e., Banco Santander and Zions Bancorporation go up and down completely randomly.

Pair Corralation between Banco Santander and Zions Bancorporation

Given the investment horizon of 90 days Banco Santander Brasil is expected to generate 1.18 times more return on investment than Zions Bancorporation. However, Banco Santander is 1.18 times more volatile than Zions Bancorporation. It trades about 0.18 of its potential returns per unit of risk. Zions Bancorporation is currently generating about -0.06 per unit of risk. If you would invest  387.00  in Banco Santander Brasil on December 27, 2024 and sell it today you would earn a total of  91.50  from holding Banco Santander Brasil or generate 23.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Banco Santander Brasil  vs.  Zions Bancorp.

Banco Santander Brasil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Brasil are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Banco Santander reported solid returns over the last few months and may actually be approaching a breakup point.

Zions Bancorporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zions Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Banco Santander and Zions Bancorporation

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

The idea behind Banco Santander Brasil and Zions Bancorporation 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.