Correlation Between Citizens Financial and Grupo Supervielle

Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Grupo Supervielle 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 Grupo Supervielle 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 Grupo Supervielle SA, you can compare the effects of market volatilities on Citizens Financial and Grupo Supervielle 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 Grupo Supervielle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Grupo Supervielle.

Diversification Opportunities for Citizens Financial and Grupo Supervielle

-0.92

Correlation Coefficient

Citizens Financial  Grupo Supervielle

Pay attention - limited upside

The 3 months correlation between Citizens and Grupo is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Grupo Supervielle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Supervielle 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 Grupo Supervielle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Supervielle has no effect on the direction of Citizens Financial i.e., Citizens Financial and Grupo Supervielle go up and down completely randomly.

Pair Corralation between Citizens Financial and Grupo Supervielle

Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Grupo Supervielle. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 3.94 times less risky than Grupo Supervielle. The preferred stock trades about -0.21 of its potential returns per unit of risk. The Grupo Supervielle SA is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,142  in Grupo Supervielle SA on September 27, 2024 and sell it today you would earn a total of  435.00  from holding Grupo Supervielle SA or generate 38.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Citizens Financial Group  vs.  Grupo Supervielle SA

Citizens Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Preferred Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Grupo Supervielle

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Supervielle SA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grupo Supervielle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and Grupo Supervielle

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

The idea behind Citizens Financial Group and Grupo Supervielle SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.