Correlation Between Banco Alfa and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Banco Alfa 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 Banco Alfa and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Alfa de and Banco Santander Chile, you can compare the effects of market volatilities on Banco Alfa 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 Banco Alfa with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Alfa and Banco Santander.
Diversification Opportunities for Banco Alfa and Banco Santander
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Banco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Banco Alfa de 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 Banco Alfa 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 Alfa de 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 Banco Alfa i.e., Banco Alfa and Banco Santander go up and down completely randomly.
Pair Corralation between Banco Alfa and Banco Santander
If you would invest 1,254 in Banco Alfa de on January 30, 2024 and sell it today you would earn a total of 0.00 from holding Banco Alfa de or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Banco Alfa de vs. Banco Santander Chile
Performance |
Timeline |
Banco Alfa de |
Banco Santander Chile |
Banco Alfa and Banco Santander Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banco Alfa and Banco Santander
The main advantage of trading using opposite Banco Alfa and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Alfa 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.Banco Alfa vs. Banco do Brasil | Banco Alfa vs. Banco Bradesco SA | Banco Alfa vs. Petrleo Brasileiro SA | Banco Alfa vs. BB Seguridade Participacoes |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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