Correlation Between Citigroup and Indra Sistemas

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

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

Diversification Opportunities for Citigroup and Indra Sistemas

-0.71

Correlation Coefficient

Citigroup  Indra Sistemas

Pay attention - limited upside

The 3 months correlation between Citigroup and Indra is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Indra Sistemas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indra Sistemas SA 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 Indra Sistemas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indra Sistemas SA has no effect on the direction of Citigroup i.e., Citigroup and Indra Sistemas go up and down completely randomly.

Pair Corralation between Citigroup and Indra Sistemas

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.21 times less return on investment than Indra Sistemas. But when comparing it to its historical volatility, Citigroup is 2.02 times less risky than Indra Sistemas. It trades about 0.07 of its potential returns per unit of risk. Indra Sistemas SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  556.00  in Indra Sistemas SA on September 26, 2024 and sell it today you would earn a total of  297.00  from holding Indra Sistemas SA or generate 53.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Citigroup  vs.  Indra Sistemas SA

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.

Indra Sistemas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indra Sistemas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Citigroup and Indra Sistemas

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

The idea behind Citigroup and Indra Sistemas SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.