Correlation Between Ecovyst and BANCO

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

By analyzing existing cross correlation between Ecovyst and BANCO SANTANDER S, you can compare the effects of market volatilities on Ecovyst and BANCO 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 Ecovyst with a short position of BANCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecovyst and BANCO.

Diversification Opportunities for Ecovyst and BANCO

-0.05

Correlation Coefficient

Ecovyst  BANCO

Good diversification

The 3 months correlation between Ecovyst and BANCO is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and BANCO SANTANDER S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER S and Ecovyst 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 Ecovyst are associated (or correlated) with BANCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANCO SANTANDER S has no effect on the direction of Ecovyst i.e., Ecovyst and BANCO go up and down completely randomly.

Pair Corralation between Ecovyst and BANCO

Given the investment horizon of 90 days Ecovyst is expected to generate 6.01 times more return on investment than BANCO. However, Ecovyst is 6.01 times more volatile than BANCO SANTANDER S. It trades about 0.17 of its potential returns per unit of risk. BANCO SANTANDER S is currently generating about 0.01 per unit of risk. If you would invest  615.00  in Ecovyst on October 25, 2024 and sell it today you would earn a total of  183.00  from holding Ecovyst or generate 29.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Ecovyst  vs.  BANCO SANTANDER S

Ecovyst

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.

BANCO SANTANDER S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANCO SANTANDER S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ecovyst and BANCO

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

The idea behind Ecovyst and BANCO SANTANDER S 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.