Correlation Between Banco Santander and Toronto Dominion

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

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

Diversification Opportunities for Banco Santander and Toronto Dominion

0.0

Correlation Coefficient

Banco Santander  Toronto Dominion

Pay attention - limited upside

The 3 months correlation between Banco and Toronto is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander SA and The Toronto Dominion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion 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 SA are associated (or correlated) with Toronto Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toronto Dominion has no effect on the direction of Banco Santander i.e., Banco Santander and Toronto Dominion go up and down completely randomly.

Pair Corralation between Banco Santander and Toronto Dominion

If you would invest  586.00  in Banco Santander SA on April 22, 2025 and sell it today you would earn a total of  144.00  from holding Banco Santander SA or generate 24.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Banco Santander SA  vs.  The Toronto Dominion Bank

Banco Santander SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, Banco Santander reported solid returns over the last few months and may actually be approaching a breakup point.

Toronto Dominion

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Toronto Dominion Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Toronto Dominion is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Banco Santander and Toronto Dominion

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

The idea behind Banco Santander SA and The Toronto Dominion Bank 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.