Correlation Between United Natural and Banco Santander

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Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods, and Banco Santander Chile, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Banco Santander.

Diversification Opportunities for United Natural and Banco Santander

UnitedBancoDiversified AwayUnitedBancoDiversified Away100%
0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between United and Banco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods, and Banco Santander Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Chile and United Natural 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 United Natural Foods, 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 Chile has no effect on the direction of United Natural i.e., United Natural and Banco Santander go up and down completely randomly.

Pair Corralation between United Natural and Banco Santander

Assuming the 90 days trading horizon United Natural Foods, is expected to generate 3.13 times more return on investment than Banco Santander. However, United Natural is 3.13 times more volatile than Banco Santander Chile. It trades about 0.15 of its potential returns per unit of risk. Banco Santander Chile is currently generating about 0.16 per unit of risk. If you would invest  3,493  in United Natural Foods, on November 21, 2024 and sell it today you would earn a total of  1,241  from holding United Natural Foods, or generate 35.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

United Natural Foods,  vs.  Banco Santander Chile

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 01020304050
JavaScript chart by amCharts 3.21.15U2NF34 B1SA34
       Timeline  
United Natural Foods, 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, United Natural sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb354045
Banco Santander Chile 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Chile are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Banco Santander sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5658606264

United Natural and Banco Santander Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.88-9.64-6.41-3.180.05393.426.9510.4814.0117.55 0.050.100.150.20
JavaScript chart by amCharts 3.21.15U2NF34 B1SA34
       Returns  

Pair Trading with United Natural and Banco Santander

The main advantage of trading using opposite United Natural and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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 United Natural Foods, and Banco Santander Chile 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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