Correlation Between BANCO and Tesla

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

Diversification Opportunities for BANCO and Tesla

0.19

Correlation Coefficient

BANCO  Tesla

Average diversification

The 3 months correlation between BANCO and Tesla is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BANCO SANTANDER SA and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of BANCO i.e., BANCO and Tesla go up and down completely randomly.

Pair Corralation between BANCO and Tesla

Assuming the 90 days trading horizon BANCO SANTANDER SA is expected to generate 0.31 times more return on investment than Tesla. However, BANCO SANTANDER SA is 3.21 times less risky than Tesla. It trades about 0.0 of its potential returns per unit of risk. Tesla Inc is currently generating about -0.19 per unit of risk. If you would invest  9,912  in BANCO SANTANDER SA on December 22, 2024 and sell it today you would lose (26.00) from holding BANCO SANTANDER SA or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.0%
Values	Daily Returns

BANCO SANTANDER SA  vs.  Tesla Inc

BANCO SANTANDER SA

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to short-term losses for the investors.

Tesla Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with BANCO and Tesla

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

The idea behind BANCO SANTANDER SA and Tesla 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.