Correlation Between Centrais Electricas and Banco Santander

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

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

Diversification Opportunities for Centrais Electricas and Banco Santander

0.72

Correlation Coefficient

Centrais Electricas  Banco Santander

Poor diversification

The 3 months correlation between Centrais and Banco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira and Banco Santander Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Brasil and Centrais Electricas 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 Centrais Electricas Brasileiras 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 Brasil has no effect on the direction of Centrais Electricas i.e., Centrais Electricas and Banco Santander go up and down completely randomly.

Pair Corralation between Centrais Electricas and Banco Santander

Considering the 90-day investment horizon Centrais Electricas Brasileiras is expected to under-perform the Banco Santander. But the stock apears to be less risky and, when comparing its historical volatility, Centrais Electricas Brasileiras is 1.3 times less risky than Banco Santander. The stock trades about -0.08 of its potential returns per unit of risk. The Banco Santander Brasil is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  487.00  in Banco Santander Brasil on May 7, 2025 and sell it today you would lose (9.00) from holding Banco Santander Brasil or give up 1.85% of portfolio value over 90 days.

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

Centrais Electricas Brasileira  vs.  Banco Santander Brasil

Centrais Electricas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centrais Electricas Brasileiras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Banco Santander Brasil

Risk-Adjusted Performance

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 relatively invariable fundamental drivers, Banco Santander is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Centrais Electricas and Banco Santander

The main advantage of trading using opposite Centrais Electricas and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Electricas 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 Centrais Electricas Brasileiras and Banco Santander Brasil 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.