Correlation Between Citigroup and Aena SA
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aena SA 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 Citigroup and Aena SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aena SA, you can compare the effects of market volatilities on Citigroup and Aena SA 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 Citigroup with a short position of Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aena SA.
Diversification Opportunities for Citigroup and Aena SA
Very weak diversification
The 3 months correlation between Citigroup and Aena is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA and Citigroup 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 Citigroup are associated (or correlated) with Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of Citigroup i.e., Citigroup and Aena SA go up and down completely randomly.
Pair Corralation between Citigroup and Aena SA
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.53 times more return on investment than Aena SA. However, Citigroup is 1.53 times more volatile than Aena SA. It trades about 0.13 of its potential returns per unit of risk. Aena SA is currently generating about 0.13 per unit of risk. If you would invest 4,053 in Citigroup on September 1, 2024 and sell it today you would earn a total of 3,034 from holding Citigroup or generate 74.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.18% |
| Values | Daily Returns |
Citigroup vs. Aena SA
Performance |
| Timeline |
| Citigroup |
| Aena SA |
Citigroup and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aena SA
The main advantage of trading using opposite Citigroup and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aena SA 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 Aena SA will offset losses from the drop in Aena SA's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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