Correlation Between Citigroup and Pampa Energia
Can any of the company-specific risk be diversified away by investing in both Citigroup and Pampa Energia 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 Pampa Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Pampa Energia SA, you can compare the effects of market volatilities on Citigroup and Pampa Energia 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 Pampa Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Pampa Energia.
Diversification Opportunities for Citigroup and Pampa Energia
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Pampa is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pampa Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energia 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 Pampa Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energia SA has no effect on the direction of Citigroup i.e., Citigroup and Pampa Energia go up and down completely randomly.
Pair Corralation between Citigroup and Pampa Energia
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.35 times less return on investment than Pampa Energia. But when comparing it to its historical volatility, Citigroup is 1.25 times less risky than Pampa Energia. It trades about 0.16 of its potential returns per unit of risk. Pampa Energia SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 287,000 in Pampa Energia SA on November 2, 2024 and sell it today you would earn a total of 141,000 from holding Pampa Energia SA or generate 49.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Citigroup vs. Pampa Energia SA
Performance |
| Timeline |
| Citigroup |
| Pampa Energia SA |
Citigroup and Pampa Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Pampa Energia
The main advantage of trading using opposite Citigroup and Pampa Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Pampa Energia 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 Pampa Energia will offset losses from the drop in Pampa Energia's long position.| Citigroup vs. Royal Bank of | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Canadian Imperial Bank |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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