Correlation Between Citigroup and Romcab SA
Can any of the company-specific risk be diversified away by investing in both Citigroup and Romcab SA 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 Romcab SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Romcab SA, you can compare the effects of market volatilities on Citigroup and Romcab SA 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 Romcab SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Romcab SA.
Diversification Opportunities for Citigroup and Romcab SA
Pay attention - limited upside
The 3 months correlation between Citigroup and Romcab is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Romcab SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romcab 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 Romcab SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romcab SA has no effect on the direction of Citigroup i.e., Citigroup and Romcab SA go up and down completely randomly.
Pair Corralation between Citigroup and Romcab SA
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.42 times more return on investment than Romcab SA. However, Citigroup is 2.38 times less risky than Romcab SA. It trades about 0.22 of its potential returns per unit of risk. Romcab SA is currently generating about -0.32 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 656.00 from holding Citigroup or generate 10.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Romcab SA
Performance |
| Timeline |
| Citigroup |
| Romcab SA |
Citigroup and Romcab SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Romcab SA
The main advantage of trading using opposite Citigroup and Romcab SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Romcab SA 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 Romcab SA will offset losses from the drop in Romcab SA's 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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