Correlation Between Citigroup and BBVA Sociedad

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Can any of the company-specific risk be diversified away by investing in both Citigroup and BBVA Sociedad 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 BBVA Sociedad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BBVA Sociedad Titulizadora, you can compare the effects of market volatilities on Citigroup and BBVA Sociedad 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 BBVA Sociedad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BBVA Sociedad.

Diversification Opportunities for Citigroup and BBVA Sociedad

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citigroup and BBVA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BBVA Sociedad Titulizadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Sociedad Tituli 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 BBVA Sociedad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Sociedad Tituli has no effect on the direction of Citigroup i.e., Citigroup and BBVA Sociedad go up and down completely randomly.

Pair Corralation between Citigroup and BBVA Sociedad

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.51 times more return on investment than BBVA Sociedad. However, Citigroup is 2.51 times more volatile than BBVA Sociedad Titulizadora. It trades about 0.27 of its potential returns per unit of risk. BBVA Sociedad Titulizadora is currently generating about 0.0 per unit of risk. If you would invest  6,315  in Citigroup on September 2, 2024 and sell it today you would earn a total of  772.00  from holding Citigroup or generate 12.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy80.95%
ValuesDaily Returns

Citigroup  vs.  BBVA Sociedad Titulizadora

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
BBVA Sociedad Tituli 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BBVA Sociedad Titulizadora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Citigroup and BBVA Sociedad Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and BBVA Sociedad

The main advantage of trading using opposite Citigroup and BBVA Sociedad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BBVA Sociedad 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 BBVA Sociedad will offset losses from the drop in BBVA Sociedad's long position.
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The idea behind Citigroup and BBVA Sociedad Titulizadora pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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