Correlation Between Citigroup and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Citigroup and Telecom Argentina 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 Telecom Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Telecom Argentina, you can compare the effects of market volatilities on Citigroup and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Telecom Argentina.
Diversification Opportunities for Citigroup and Telecom Argentina
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Telecom is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Telecom Argentina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of Citigroup i.e., Citigroup and Telecom Argentina go up and down completely randomly.
Pair Corralation between Citigroup and Telecom Argentina
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.95 times less return on investment than Telecom Argentina. But when comparing it to its historical volatility, Citigroup is 1.83 times less risky than Telecom Argentina. It trades about 0.15 of its potential returns per unit of risk. Telecom Argentina is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 184,500 in Telecom Argentina on August 30, 2024 and sell it today you would earn a total of 109,500 from holding Telecom Argentina or generate 59.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Telecom Argentina
Performance |
| Timeline |
| Citigroup |
| Telecom Argentina |
Citigroup and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Telecom Argentina
The main advantage of trading using opposite Citigroup and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Telecom Argentina vs. Transportadora de Gas | Telecom Argentina vs. Harmony Gold Mining | Telecom Argentina vs. Compania de Transporte |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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