Correlation Between Citizens Financial and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Citizens Financial 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 Citizens Financial and Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and Banco Santander Chile, you can compare the effects of market volatilities on Citizens Financial 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 Citizens Financial with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Banco Santander.
Diversification Opportunities for Citizens Financial and Banco Santander
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citizens and Banco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Banco Santander Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Chile and Citizens Financial 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 Citizens Financial Group 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 Chile has no effect on the direction of Citizens Financial i.e., Citizens Financial and Banco Santander go up and down completely randomly.
Pair Corralation between Citizens Financial and Banco Santander
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Banco Santander. In addition to that, Citizens Financial is 1.09 times more volatile than Banco Santander Chile. It trades about -0.06 of its total potential returns per unit of risk. Banco Santander Chile is currently generating about -0.03 per unit of volatility. If you would invest 2,046 in Banco Santander Chile on October 25, 2024 and sell it today you would lose (60.00) from holding Banco Santander Chile or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Banco Santander Chile
Performance |
| Timeline |
| Citizens Financial |
| Banco Santander Chile |
Citizens Financial and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Banco Santander
The main advantage of trading using opposite Citizens Financial and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial 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.| Citizens Financial vs. Texas Capital Bancshares | Citizens Financial vs. Washington Federal | Citizens Financial vs. First Guaranty Bancshares | Citizens Financial vs. Aquagold International |
| Banco Santander vs. Bancolombia SA ADR | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. Credicorp | Banco Santander vs. Banco Santander Brasil |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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