Correlation Between Citigroup and Captiva Verde

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

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

Diversification Opportunities for Citigroup and Captiva Verde

-0.73

Correlation Coefficient

Citigroup  Captiva Verde

Pay attention - limited upside

The 3 months correlation between Citigroup and Captiva is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Captiva Verde Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Captiva Verde Land 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 Captiva Verde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Captiva Verde Land has no effect on the direction of Citigroup i.e., Citigroup and Captiva Verde go up and down completely randomly.

Pair Corralation between Citigroup and Captiva Verde

Taking into account the 90-day investment horizon Citigroup is expected to generate 21.43 times less return on investment than Captiva Verde. But when comparing it to its historical volatility, Citigroup is 24.83 times less risky than Captiva Verde. It trades about 0.17 of its potential returns per unit of risk. Captiva Verde Land is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.10  in Captiva Verde Land on September 17, 2024 and sell it today you would lose (1.60) from holding Captiva Verde Land or give up 76.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Captiva Verde Land

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Captiva Verde Land

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Captiva Verde Land are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Captiva Verde reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Captiva Verde

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

The idea behind Citigroup and Captiva Verde Land 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.