Correlation Between Banco Santander and CFI Holding

Can any of the company-specific risk be diversified away by investing in both Banco Santander and CFI Holding 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 CFI Holding 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 CFI Holding SA, you can compare the effects of market volatilities on Banco Santander and CFI Holding 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 CFI Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and CFI Holding.

Diversification Opportunities for Banco Santander and CFI Holding

-0.09

Correlation Coefficient

Banco Santander  CFI Holding

Good diversification

The 3 months correlation between Banco and CFI is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and CFI Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFI Holding SA 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 CFI Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFI Holding SA has no effect on the direction of Banco Santander i.e., Banco Santander and CFI Holding go up and down completely randomly.

Pair Corralation between Banco Santander and CFI Holding

Assuming the 90 days trading horizon Banco Santander SA is expected to generate 0.46 times more return on investment than CFI Holding. However, Banco Santander SA is 2.18 times less risky than CFI Holding. It trades about 0.04 of its potential returns per unit of risk. CFI Holding SA is currently generating about -0.02 per unit of risk. If you would invest  1,641  in Banco Santander SA on August 31, 2024 and sell it today you would earn a total of  237.00  from holding Banco Santander SA or generate 14.44% 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.  CFI Holding SA

Banco Santander SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Banco Santander is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CFI Holding SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CFI Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Banco Santander and CFI Holding

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

The idea behind Banco Santander SA and CFI Holding 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.