Correlation Between Citigroup and Patria Latin
Can any of the company-specific risk be diversified away by investing in both Citigroup and Patria Latin 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 Patria Latin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Patria Latin American, you can compare the effects of market volatilities on Citigroup and Patria Latin 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 Patria Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Patria Latin.
Diversification Opportunities for Citigroup and Patria Latin
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Patria is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Patria Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Latin American 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 Patria Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Latin American has no effect on the direction of Citigroup i.e., Citigroup and Patria Latin go up and down completely randomly.
Pair Corralation between Citigroup and Patria Latin
Taking into account the 90-day investment horizon Citigroup is expected to generate 44.59 times more return on investment than Patria Latin. However, Citigroup is 44.59 times more volatile than Patria Latin American. It trades about 0.22 of its potential returns per unit of risk. Patria Latin American is currently generating about 0.17 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 Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Patria Latin American
Performance |
| Timeline |
| Citigroup |
| Patria Latin American |
Citigroup and Patria Latin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Patria Latin
The main advantage of trading using opposite Citigroup and Patria Latin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Patria Latin 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 Patria Latin will offset losses from the drop in Patria Latin's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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