Correlation Between BRB Banco and Banco Santander

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

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

Diversification Opportunities for BRB Banco and Banco Santander

0.87

Correlation Coefficient

BRB Banco  Banco Santander

Very poor diversification

The 3 months correlation between BRB and Banco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BRB Banco de and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA and BRB 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 BRB Banco 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 SA has no effect on the direction of BRB Banco i.e., BRB Banco and Banco Santander go up and down completely randomly.

Pair Corralation between BRB Banco and Banco Santander

Assuming the 90 days trading horizon BRB Banco de is expected to under-perform the Banco Santander. In addition to that, BRB Banco is 1.53 times more volatile than Banco Santander SA. It trades about -0.17 of its total potential returns per unit of risk. Banco Santander SA is currently generating about -0.24 per unit of volatility. If you would invest  1,461  in Banco Santander SA on August 31, 2024 and sell it today you would lose (272.00) from holding Banco Santander SA or give up 18.62% of portfolio value over 90 days.

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

BRB Banco de  vs.  Banco Santander SA

BRB Banco de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRB Banco de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Banco Santander SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BRB Banco and Banco Santander

The main advantage of trading using opposite BRB Banco and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRB Banco 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 BRB Banco de and Banco Santander SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.