Correlation Between Citigroup and CA Modas
Can any of the company-specific risk be diversified away by investing in both Citigroup and CA Modas 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 CA Modas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CA Modas SA, you can compare the effects of market volatilities on Citigroup and CA Modas 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 CA Modas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CA Modas.
Diversification Opportunities for Citigroup and CA Modas
Poor diversification
The 3 months correlation between Citigroup and CEAB3 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CA Modas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Modas 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 CA Modas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Modas SA has no effect on the direction of Citigroup i.e., Citigroup and CA Modas go up and down completely randomly.
Pair Corralation between Citigroup and CA Modas
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than CA Modas. However, Citigroup is 2.21 times less risky than CA Modas. It trades about 0.23 of its potential returns per unit of risk. CA Modas SA is currently generating about 0.02 per unit of risk. If you would invest 6,360 in Citigroup on August 27, 2024 and sell it today you would earn a total of 624.00 from holding Citigroup or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Citigroup vs. CA Modas SA
Performance |
| Timeline |
| Citigroup |
| CA Modas SA |
Citigroup and CA Modas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CA Modas
The main advantage of trading using opposite Citigroup and CA Modas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CA Modas 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 CA Modas will offset losses from the drop in CA Modas' long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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