Correlation Between A1VY34 and Banco Santander

Can any of the company-specific risk be diversified away by investing in both A1VY34 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 A1VY34 and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A1VY34 and Banco Santander Chile, you can compare the effects of market volatilities on A1VY34 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 A1VY34 with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1VY34 and Banco Santander.

Diversification Opportunities for A1VY34 and Banco Santander

0.49

Correlation Coefficient

A1VY34  Banco Santander

Very weak diversification

The 3 months correlation between A1VY34 and Banco is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding A1VY34 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 A1VY34 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 A1VY34 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 A1VY34 i.e., A1VY34 and Banco Santander go up and down completely randomly.

Pair Corralation between A1VY34 and Banco Santander

Assuming the 90 days trading horizon A1VY34 is expected to generate 8.6 times less return on investment than Banco Santander. But when comparing it to its historical volatility, A1VY34 is 35.9 times less risky than Banco Santander. It trades about 0.13 of its potential returns per unit of risk. Banco Santander Chile is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,676  in Banco Santander Chile on September 25, 2024 and sell it today you would earn a total of  114.00  from holding Banco Santander Chile or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

A1VY34  vs.  Banco Santander Chile

A1VY34

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in A1VY34 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, A1VY34 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Banco Santander Chile

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Chile are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Banco Santander is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with A1VY34 and Banco Santander

The main advantage of trading using opposite A1VY34 and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1VY34 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 A1VY34 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.