Correlation Between ST Bancorp and Popular

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

By analyzing existing cross correlation between ST Bancorp and Popular, you can compare the effects of market volatilities on ST Bancorp and Popular 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 ST Bancorp with a short position of Popular. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Bancorp and Popular.

Diversification Opportunities for ST Bancorp and Popular

0.44

Correlation Coefficient

ST Bancorp  Popular

Very weak diversification

The 3 months correlation between STBA and Popular is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp and Popular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular and ST Bancorp 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 ST Bancorp are associated (or correlated) with Popular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular has no effect on the direction of ST Bancorp i.e., ST Bancorp and Popular go up and down completely randomly.

Pair Corralation between ST Bancorp and Popular

Given the investment horizon of 90 days ST Bancorp is expected to under-perform the Popular. In addition to that, ST Bancorp is 1.17 times more volatile than Popular. It trades about -0.06 of its total potential returns per unit of risk. Popular is currently generating about 0.16 per unit of volatility. If you would invest  10,291  in Popular on May 11, 2025 and sell it today you would earn a total of  1,204  from holding Popular or generate 11.7% return on investment over 90 days.

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

ST Bancorp  vs.  Popular

ST Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days ST Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, ST Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Popular

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Popular are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Popular may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with ST Bancorp and Popular

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

The idea behind ST Bancorp and Popular 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.