Correlation Between Banco Santander and Banco Pan

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

Diversification Opportunities for Banco Santander and Banco Pan

0.78

Correlation Coefficient

Banco Santander  Banco Pan

Poor diversification

The 3 months correlation between Banco and Banco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and Banco Pan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Pan 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 Banco Pan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Pan SA has no effect on the direction of Banco Santander i.e., Banco Santander and Banco Pan go up and down completely randomly.

Pair Corralation between Banco Santander and Banco Pan

Assuming the 90 days trading horizon Banco Santander SA is expected to generate 0.82 times more return on investment than Banco Pan. However, Banco Santander SA is 1.22 times less risky than Banco Pan. It trades about 0.14 of its potential returns per unit of risk. Banco Pan SA is currently generating about 0.03 per unit of risk. If you would invest  1,315  in Banco Santander SA on November 28, 2024 and sell it today you would earn a total of  69.00  from holding Banco Santander SA or generate 5.25% return on investment over 90 days.

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

Banco Santander SA  vs.  Banco Pan SA

Banco Santander SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Banco Santander may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Banco Pan SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Pan SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Banco Pan is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Banco Santander and Banco Pan

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

The idea behind Banco Santander SA and Banco Pan 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.