Correlation Between BANCO and Fastly

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

Diversification Opportunities for BANCO and Fastly

0.43

Correlation Coefficient

BANCO  Fastly

Very weak diversification

The 3 months correlation between BANCO and Fastly is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BANCO SANTANDER SA and Fastly Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastly Inc 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 SA are associated (or correlated) with Fastly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastly Inc has no effect on the direction of BANCO i.e., BANCO and Fastly go up and down completely randomly.

Pair Corralation between BANCO and Fastly

Assuming the 90 days trading horizon BANCO SANTANDER SA is expected to under-perform the Fastly. But the bond apears to be less risky and, when comparing its historical volatility, BANCO SANTANDER SA is 12.17 times less risky than Fastly. The bond trades about -0.1 of its potential returns per unit of risk. The Fastly Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  724.00  in Fastly Inc on October 10, 2024 and sell it today you would earn a total of  200.50  from holding Fastly Inc or generate 27.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	87.1%
Values	Daily Returns

BANCO SANTANDER SA  vs.  Fastly Inc

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 somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Fastly Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fastly Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Fastly showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANCO and Fastly

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

The idea behind BANCO SANTANDER SA and Fastly Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..