Correlation Between Citigroup and Companhia
Can any of the company-specific risk be diversified away by investing in both Citigroup and Companhia 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 Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Companhia de Saneamento, you can compare the effects of market volatilities on Citigroup and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Companhia.
Diversification Opportunities for Citigroup and Companhia
Significant diversification
The 3 months correlation between Citigroup and Companhia is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Citigroup i.e., Citigroup and Companhia go up and down completely randomly.
Pair Corralation between Citigroup and Companhia
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.89 times more return on investment than Companhia. However, Citigroup is 1.12 times less risky than Companhia. It trades about 0.08 of its potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.04 per unit of risk. If you would invest 5,405 in Citigroup on August 29, 2024 and sell it today you would earn a total of 1,570 from holding Citigroup or generate 29.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.05% |
| Values | Daily Returns |
Citigroup vs. Companhia de Saneamento
Performance |
| Timeline |
| Citigroup |
| Companhia de Saneamento |
Citigroup and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Companhia
The main advantage of trading using opposite Citigroup and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Companhia vs. KINGBOARD CHEMICAL | Companhia vs. CHEMICAL INDUSTRIES | Companhia vs. ASURE SOFTWARE | Companhia vs. Sanyo Chemical Industries |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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