Correlation Between Citigroup and Inversiones Aguas
Can any of the company-specific risk be diversified away by investing in both Citigroup and Inversiones Aguas 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 Inversiones Aguas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Inversiones Aguas Metropolitanas, you can compare the effects of market volatilities on Citigroup and Inversiones Aguas 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 Inversiones Aguas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Inversiones Aguas.
Diversification Opportunities for Citigroup and Inversiones Aguas
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Inversiones is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Inversiones Aguas Metropolitan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inversiones Aguas 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 Inversiones Aguas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inversiones Aguas has no effect on the direction of Citigroup i.e., Citigroup and Inversiones Aguas go up and down completely randomly.
Pair Corralation between Citigroup and Inversiones Aguas
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.03 times less return on investment than Inversiones Aguas. In addition to that, Citigroup is 1.12 times more volatile than Inversiones Aguas Metropolitanas. It trades about 0.07 of its total potential returns per unit of risk. Inversiones Aguas Metropolitanas is currently generating about 0.09 per unit of volatility. If you would invest 41,952 in Inversiones Aguas Metropolitanas on September 20, 2024 and sell it today you would earn a total of 31,361 from holding Inversiones Aguas Metropolitanas or generate 74.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Citigroup vs. Inversiones Aguas Metropolitan
Performance |
| Timeline |
| Citigroup |
| Inversiones Aguas |
Citigroup and Inversiones Aguas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Inversiones Aguas
The main advantage of trading using opposite Citigroup and Inversiones Aguas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Inversiones Aguas 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 Inversiones Aguas will offset losses from the drop in Inversiones Aguas' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Inversiones Aguas vs. Aguas Andinas SA | Inversiones Aguas vs. Engie Energia Chile | Inversiones Aguas vs. Colbun | Inversiones Aguas vs. Enel Chile SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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