Correlation Between Citigroup and BRB Banco
Can any of the company-specific risk be diversified away by investing in both Citigroup and BRB Banco 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 BRB Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BRB Banco, you can compare the effects of market volatilities on Citigroup and BRB Banco 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 BRB Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BRB Banco.
Diversification Opportunities for Citigroup and BRB Banco
Excellent diversification
The 3 months correlation between Citigroup and BRB is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BRB Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRB Banco 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 BRB Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRB Banco has no effect on the direction of Citigroup i.e., Citigroup and BRB Banco go up and down completely randomly.
Pair Corralation between Citigroup and BRB Banco
Assuming the 90 days trading horizon Citigroup is expected to generate 0.39 times more return on investment than BRB Banco. However, Citigroup is 2.57 times less risky than BRB Banco. It trades about 0.08 of its potential returns per unit of risk. BRB Banco is currently generating about 0.0 per unit of risk. If you would invest 3,609 in Citigroup on August 27, 2024 and sell it today you would earn a total of 3,134 from holding Citigroup or generate 86.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Citigroup vs. BRB Banco
Performance |
| Timeline |
| Citigroup |
| BRB Banco |
Citigroup and BRB Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BRB Banco
The main advantage of trading using opposite Citigroup and BRB Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BRB Banco 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 BRB Banco will offset losses from the drop in BRB Banco's long position.| Citigroup vs. Unity Software | Citigroup vs. Warner Music Group | Citigroup vs. Spotify Technology SA | Citigroup vs. Micron Technology |
| BRB Banco vs. BRB Banco de | BRB Banco vs. Banco do Nordeste | BRB Banco vs. Banco do Estado | BRB Banco vs. Banco Mercantil do |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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