Correlation Between Banco Santander and BayCom Corp

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Can any of the company-specific risk be diversified away by investing in both Banco Santander and BayCom Corp 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 Santander and BayCom Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Chile and BayCom Corp, you can compare the effects of market volatilities on Banco Santander and BayCom Corp 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 Santander with a short position of BayCom Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and BayCom Corp.

Diversification Opportunities for Banco Santander and BayCom Corp

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Banco and BayCom is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Chile and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom Corp and Banco Santander 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 Chile are associated (or correlated) with BayCom Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BayCom Corp has no effect on the direction of Banco Santander i.e., Banco Santander and BayCom Corp go up and down completely randomly.

Pair Corralation between Banco Santander and BayCom Corp

Given the investment horizon of 90 days Banco Santander Chile is expected to under-perform the BayCom Corp. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Chile is 1.37 times less risky than BayCom Corp. The stock trades about -0.04 of its potential returns per unit of risk. The BayCom Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,317  in BayCom Corp on September 13, 2024 and sell it today you would earn a total of  576.00  from holding BayCom Corp or generate 24.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Banco Santander Chile  vs.  BayCom Corp

 Performance 
       Timeline  
Banco Santander Chile 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Banco Santander Chile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Banco Santander is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
BayCom Corp 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in BayCom Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, BayCom Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Banco Santander and BayCom Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Banco Santander and BayCom Corp

The main advantage of trading using opposite Banco Santander and BayCom Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander position performs unexpectedly, BayCom Corp 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 BayCom Corp will offset losses from the drop in BayCom Corp's long position.
The idea behind Banco Santander Chile and BayCom Corp 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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