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
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Banco is 0.63. 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 generate 0.55 times more return on investment than Banco Santander. However, Citizens Financial Group, is 1.81 times less risky than Banco Santander. It trades about 0.02 of its potential returns per unit of risk. Banco Santander Chile is currently generating about -0.03 per unit of risk. If you would invest 2,665 in Citizens Financial Group, on October 25, 2024 and sell it today you would earn a total of 17.00 from holding Citizens Financial Group, or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group, vs. Banco Santander Chile
Performance |
| Timeline |
| Citizens Financial Group, |
| 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. The Coca Cola | Citizens Financial vs. John B Sanfilippo | Citizens Financial vs. Diageo PLC ADR | Citizens Financial vs. CanSino Biologics |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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