Correlation Between Citizens Northern and Banco Santander

Can any of the company-specific risk be diversified away by investing in both Citizens Northern 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 Northern 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 Northern Corp and Banco Santander Brasil, you can compare the effects of market volatilities on Citizens Northern 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 Northern with a short position of Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Northern and Banco Santander.

Diversification Opportunities for Citizens Northern and Banco Santander

0.84

Correlation Coefficient

Citizens Northern  Banco Santander

Very poor diversification

The 3 months correlation between Citizens and Banco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Northern Corp 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 Citizens Northern 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 Northern Corp 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 Citizens Northern i.e., Citizens Northern and Banco Santander go up and down completely randomly.

Pair Corralation between Citizens Northern and Banco Santander

Given the investment horizon of 90 days Citizens Northern is expected to generate 1.71 times less return on investment than Banco Santander. But when comparing it to its historical volatility, Citizens Northern Corp is 1.05 times less risky than Banco Santander. It trades about 0.11 of its potential returns per unit of risk. Banco Santander Brasil is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  384.00  in Banco Santander Brasil on December 21, 2024 and sell it today you would earn a total of  92.00  from holding Banco Santander Brasil or generate 23.96% return on investment over 90 days.

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

Citizens Northern Corp  vs.  Banco Santander Brasil

Citizens Northern Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Northern Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Citizens Northern exhibited solid returns over the last few months and may actually be approaching a breakup point.

Banco Santander Brasil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Brasil are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Banco Santander reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Northern and Banco Santander

The main advantage of trading using opposite Citizens Northern and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Northern 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 Citizens Northern Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.