Correlation Between Truist Financial and Banco Santander

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

By analyzing existing cross correlation between Truist Financial Corp and Banco Santander Brasil, you can compare the effects of market volatilities on Truist Financial and Banco Santander 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 Truist Financial with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Banco Santander.

Diversification Opportunities for Truist Financial and Banco Santander

-0.69

Correlation Coefficient

Truist Financial  Banco Santander

Excellent diversification

The 3 months correlation between Truist and Banco is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and Banco Santander Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Brasil and Truist Financial 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 Truist Financial Corp are associated (or correlated) with Banco Santander. 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 Brasil has no effect on the direction of Truist Financial i.e., Truist Financial and Banco Santander go up and down completely randomly.

Pair Corralation between Truist Financial and Banco Santander

Considering the 90-day investment horizon Truist Financial Corp is expected to generate 0.48 times more return on investment than Banco Santander. However, Truist Financial Corp is 2.09 times less risky than Banco Santander. It trades about -0.19 of its potential returns per unit of risk. Banco Santander Brasil is currently generating about -0.14 per unit of risk. If you would invest  4,618  in Truist Financial Corp on September 21, 2024 and sell it today you would lose (286.00) from holding Truist Financial Corp or give up 6.19% of portfolio value over 90 days.

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

Truist Financial Corp  vs.  Banco Santander Brasil

Truist Financial Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Truist Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Banco Santander Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander Brasil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Truist Financial and Banco Santander

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

The idea behind Truist Financial Corp and Banco Santander Brasil 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.