Correlation Between Banco Santander and Transport International
Can any of the company-specific risk be diversified away by investing in both Banco Santander and Transport International 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 Transport International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander SA and Transport International Holdings, you can compare the effects of market volatilities on Banco Santander and Transport International 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 Transport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Transport International.
Diversification Opportunities for Banco Santander and Transport International
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Transport is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International 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 SA are associated (or correlated) with Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of Banco Santander i.e., Banco Santander and Transport International go up and down completely randomly.
Pair Corralation between Banco Santander and Transport International
Assuming the 90 days trading horizon Banco Santander SA is expected to generate 1.17 times more return on investment than Transport International. However, Banco Santander is 1.17 times more volatile than Transport International Holdings. It trades about 0.27 of its potential returns per unit of risk. Transport International Holdings is currently generating about 0.03 per unit of risk. If you would invest 434.00 in Banco Santander SA on December 30, 2024 and sell it today you would earn a total of 198.00 from holding Banco Santander SA or generate 45.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Banco Santander SA vs. Transport International Holdin
Performance |
Timeline |
Banco Santander SA |
Transport International |
Banco Santander and Transport International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banco Santander and Transport International
The main advantage of trading using opposite Banco Santander and Transport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, Transport International 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 Transport International will offset losses from the drop in Transport International's long position.Banco Santander vs. Commercial Vehicle Group | Banco Santander vs. GRUPO CARSO A1 | Banco Santander vs. Allegheny Technologies Incorporated | Banco Santander vs. FARO Technologies |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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