Correlation Between Citigroup and Fundo Invest

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

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

Diversification Opportunities for Citigroup and Fundo Invest

-0.75

Correlation Coefficient

Citigroup  Fundo Invest

Pay attention - limited upside

The 3 months correlation between Citigroup and Fundo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Fundo Invest Imobiliario in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Invest Imobiliario 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 Fundo Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Invest Imobiliario has no effect on the direction of Citigroup i.e., Citigroup and Fundo Invest go up and down completely randomly.

Pair Corralation between Citigroup and Fundo Invest

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Fundo Invest. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 4.85 times less risky than Fundo Invest. The stock trades about -0.09 of its potential returns per unit of risk. The Fundo Invest Imobiliario is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  585.00  in Fundo Invest Imobiliario on September 25, 2024 and sell it today you would earn a total of  54.00  from holding Fundo Invest Imobiliario or generate 9.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Fundo Invest Imobiliario

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fundo Invest Imobiliario

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Invest Imobiliario has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Citigroup and Fundo Invest

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

The idea behind Citigroup and Fundo Invest Imobiliario 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.