Correlation Between Banco Del and Citigroup

Can any of the company-specific risk be diversified away by investing in both Banco Del and Citigroup 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 Banco Del and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banco del Bajo and Citigroup, you can compare the effects of market volatilities on Banco Del and Citigroup 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 Banco Del with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Del and Citigroup.

Diversification Opportunities for Banco Del and Citigroup

-0.7

Correlation Coefficient

Banco Del  Citigroup

Excellent diversification

The 3 months correlation between Banco and Citigroup is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Banco del Bajo and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Banco Del 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 Banco del Bajo are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Banco Del i.e., Banco Del and Citigroup go up and down completely randomly.

Pair Corralation between Banco Del and Citigroup

Assuming the 90 days trading horizon Banco del Bajo is expected to under-perform the Citigroup. In addition to that, Banco Del is 1.93 times more volatile than Citigroup. It trades about -0.07 of its total potential returns per unit of risk. Citigroup is currently generating about -0.03 per unit of volatility. If you would invest  144,050  in Citigroup on September 25, 2024 and sell it today you would lose (1,149) from holding Citigroup or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Banco del Bajo  vs.  Citigroup

Banco del Bajo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco del Bajo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Citigroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Citigroup showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Del and Citigroup

The main advantage of trading using opposite Banco Del and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Del position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.

The idea behind Banco del Bajo and Citigroup pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.