Correlation Between BANCO and Ecovyst

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

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

Diversification Opportunities for BANCO and Ecovyst

-0.11

Correlation Coefficient

BANCO  Ecovyst

Good diversification

The 3 months correlation between BANCO and Ecovyst is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BANCO SANTANDER S and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and BANCO 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 S are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of BANCO i.e., BANCO and Ecovyst go up and down completely randomly.

Pair Corralation between BANCO and Ecovyst

Assuming the 90 days trading horizon BANCO SANTANDER S is expected to generate 0.22 times more return on investment than Ecovyst. However, BANCO SANTANDER S is 4.56 times less risky than Ecovyst. It trades about 0.01 of its potential returns per unit of risk. Ecovyst is currently generating about -0.1 per unit of risk. If you would invest  10,000  in BANCO SANTANDER S on December 23, 2024 and sell it today you would earn a total of  19.00  from holding BANCO SANTANDER S or generate 0.19% return on investment over 90 days.

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

BANCO SANTANDER S  vs.  Ecovyst

BANCO SANTANDER S

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANCO SANTANDER S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ecovyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecovyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BANCO and Ecovyst

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

The idea behind BANCO SANTANDER S and Ecovyst 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.