Correlation Between Citigroup and Natura Co
Can any of the company-specific risk be diversified away by investing in both Citigroup and Natura Co 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 Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Natura Co Holding, you can compare the effects of market volatilities on Citigroup and Natura Co 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 Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Natura Co.
Diversification Opportunities for Citigroup and Natura Co
Weak diversification
The 3 months correlation between Citigroup and Natura is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Natura Co Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natura Co Holding 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 Natura Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natura Co Holding has no effect on the direction of Citigroup i.e., Citigroup and Natura Co go up and down completely randomly.
Pair Corralation between Citigroup and Natura Co
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.89 times more return on investment than Natura Co. However, Citigroup is 1.12 times less risky than Natura Co. It trades about 0.21 of its potential returns per unit of risk. Natura Co Holding is currently generating about -0.02 per unit of risk. If you would invest 6,255 in Citigroup on August 24, 2024 and sell it today you would earn a total of 640.00 from holding Citigroup or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Citigroup vs. Natura Co Holding
Performance |
| Timeline |
| Citigroup |
| Natura Co Holding |
Citigroup and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Natura Co
The main advantage of trading using opposite Citigroup and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Natura Co 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 Natura Co will offset losses from the drop in Natura Co'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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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