Correlation Between Citigroup and Autopistas Del

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

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

Diversification Opportunities for Citigroup and Autopistas Del

0.86

Correlation Coefficient

Citigroup  Autopistas Del

Very poor diversification

The 3 months correlation between Citigroup and Autopistas is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Autopistas del Sol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autopistas del Sol 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 Autopistas Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autopistas del Sol has no effect on the direction of Citigroup i.e., Citigroup and Autopistas Del go up and down completely randomly.

Pair Corralation between Citigroup and Autopistas Del

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.93 times less return on investment than Autopistas Del. But when comparing it to its historical volatility, Citigroup is 1.47 times less risky than Autopistas Del. It trades about 0.05 of its potential returns per unit of risk. Autopistas del Sol is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  344,500  in Autopistas del Sol on October 9, 2024 and sell it today you would earn a total of  33,500  from holding Autopistas del Sol or generate 9.72% return on investment over 90 days.

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

Citigroup  vs.  Autopistas del Sol

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Autopistas del Sol

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Autopistas del Sol are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Autopistas Del sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Autopistas Del

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

The idea behind Citigroup and Autopistas del Sol 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.