Correlation Between Citigroup and Centrais Electricas
Can any of the company-specific risk be diversified away by investing in both Citigroup and Centrais Electricas 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 Centrais Electricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Centrais Electricas Brasileiras, you can compare the effects of market volatilities on Citigroup and Centrais Electricas 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 Centrais Electricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Centrais Electricas.
Diversification Opportunities for Citigroup and Centrais Electricas
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Centrais is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas 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 Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of Citigroup i.e., Citigroup and Centrais Electricas go up and down completely randomly.
Pair Corralation between Citigroup and Centrais Electricas
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.88 times more return on investment than Centrais Electricas. However, Citigroup is 1.13 times less risky than Centrais Electricas. It trades about 0.07 of its potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about -0.03 per unit of risk. If you would invest 6,079 in Citigroup on August 30, 2024 and sell it today you would earn a total of 937.00 from holding Citigroup or generate 15.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Centrais Electricas Brasileira
Performance |
| Timeline |
| Citigroup |
| Centrais Electricas |
Citigroup and Centrais Electricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Centrais Electricas
The main advantage of trading using opposite Citigroup and Centrais Electricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Centrais Electricas 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 Centrais Electricas will offset losses from the drop in Centrais Electricas' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Centrais Electricas vs. The Mosaic | Centrais Electricas vs. Luxfer Holdings PLC | Centrais Electricas vs. Pinterest | Centrais Electricas vs. Sensient Technologies |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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