Correlation Between Banco Santander and Brookline Bancorp

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

By analyzing existing cross correlation between Banco Santander Brasil and Brookline Bancorp, you can compare the effects of market volatilities on Banco Santander and Brookline Bancorp 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 Brookline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Brookline Bancorp.

Diversification Opportunities for Banco Santander and Brookline Bancorp

-0.91

Correlation Coefficient

Banco Santander  Brookline Bancorp

Pay attention - limited upside

The 3 months correlation between Banco and Brookline is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Brookline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookline Bancorp 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 Brasil are associated (or correlated) with Brookline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookline Bancorp has no effect on the direction of Banco Santander i.e., Banco Santander and Brookline Bancorp go up and down completely randomly.

Pair Corralation between Banco Santander and Brookline Bancorp

Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Brookline Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.16 times less risky than Brookline Bancorp. The stock trades about -0.26 of its potential returns per unit of risk. The Brookline Bancorp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,002  in Brookline Bancorp on September 17, 2024 and sell it today you would earn a total of  254.00  from holding Brookline Bancorp or generate 25.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Banco Santander Brasil  vs.  Brookline Bancorp

Banco Santander Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander Brasil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Brookline Bancorp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookline Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Brookline Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Santander and Brookline Bancorp

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

The idea behind Banco Santander Brasil and Brookline Bancorp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.