Correlation Between Citigroup and CTT Correios
Can any of the company-specific risk be diversified away by investing in both Citigroup and CTT Correios 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 CTT Correios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CTT Correios, you can compare the effects of market volatilities on Citigroup and CTT Correios 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 CTT Correios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CTT Correios.
Diversification Opportunities for Citigroup and CTT Correios
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and CTT is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CTT Correios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Correios 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 CTT Correios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Correios has no effect on the direction of Citigroup i.e., Citigroup and CTT Correios go up and down completely randomly.
Pair Corralation between Citigroup and CTT Correios
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.13 times less return on investment than CTT Correios. But when comparing it to its historical volatility, Citigroup is 1.52 times less risky than CTT Correios. It trades about 0.23 of its potential returns per unit of risk. CTT Correios is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 443.00 in CTT Correios on October 30, 2024 and sell it today you would earn a total of 142.00 from holding CTT Correios or generate 32.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.37% |
| Values | Daily Returns |
Citigroup vs. CTT Correios
Performance |
| Timeline |
| Citigroup |
| CTT Correios |
Citigroup and CTT Correios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CTT Correios
The main advantage of trading using opposite Citigroup and CTT Correios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CTT Correios 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 CTT Correios will offset losses from the drop in CTT Correios' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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