Correlation Between Citigroup and Aena SME
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aena SME 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 SME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aena SME SA, you can compare the effects of market volatilities on Citigroup and Aena SME 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 SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aena SME.
Diversification Opportunities for Citigroup and Aena SME
Significant diversification
The 3 months correlation between Citigroup and Aena is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME 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 SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Citigroup i.e., Citigroup and Aena SME go up and down completely randomly.
Pair Corralation between Citigroup and Aena SME
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.01 times less return on investment than Aena SME. But when comparing it to its historical volatility, Citigroup is 1.25 times less risky than Aena SME. It trades about 0.07 of its potential returns per unit of risk. Aena SME SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,912 in Aena SME SA on August 25, 2024 and sell it today you would earn a total of 7,896 from holding Aena SME SA or generate 61.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Aena SME SA
Performance |
| Timeline |
| Citigroup |
| Aena SME SA |
Citigroup and Aena SME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aena SME
The main advantage of trading using opposite Citigroup and Aena SME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aena SME 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 SME will offset losses from the drop in Aena SME's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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