Correlation Between Summit Bank and BANCO

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

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

Diversification Opportunities for Summit Bank and BANCO

-0.05

Correlation Coefficient

Summit Bank  BANCO

Good diversification

The 3 months correlation between Summit and BANCO is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bank Group and BANCO SANTANDER SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER SA and Summit Bank 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 Summit Bank Group 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 SA has no effect on the direction of Summit Bank i.e., Summit Bank and BANCO go up and down completely randomly.

Pair Corralation between Summit Bank and BANCO

Given the investment horizon of 90 days Summit Bank Group is expected to generate 4.69 times more return on investment than BANCO. However, Summit Bank is 4.69 times more volatile than BANCO SANTANDER SA. It trades about 0.04 of its potential returns per unit of risk. BANCO SANTANDER SA is currently generating about -0.32 per unit of risk. If you would invest  1,430  in Summit Bank Group on October 10, 2024 and sell it today you would earn a total of  25.00  from holding Summit Bank Group or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Summit Bank Group  vs.  BANCO SANTANDER SA

Summit Bank Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Bank Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Summit Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

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. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BANCO SANTANDER SA investors.

Pair Trading with Summit Bank and BANCO

The main advantage of trading using opposite Summit Bank and BANCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bank 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 Summit Bank Group and BANCO SANTANDER 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.