Correlation Between Citigroup and Banco Pine

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

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

Diversification Opportunities for Citigroup and Banco Pine

-0.08

Correlation Coefficient

Citigroup  Banco Pine

Good diversification

The 3 months correlation between Citigroup and Banco is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Banco Pine SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Pine 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 Banco Pine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Pine SA has no effect on the direction of Citigroup i.e., Citigroup and Banco Pine go up and down completely randomly.

Pair Corralation between Citigroup and Banco Pine

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.48 times less return on investment than Banco Pine. In addition to that, Citigroup is 1.12 times more volatile than Banco Pine SA. It trades about 0.04 of its total potential returns per unit of risk. Banco Pine SA is currently generating about 0.12 per unit of volatility. If you would invest  404.00  in Banco Pine SA on December 20, 2024 and sell it today you would earn a total of  48.00  from holding Banco Pine SA or generate 11.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Citigroup  vs.  Banco Pine SA

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Banco Pine SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Pine SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Banco Pine unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Banco Pine

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

The idea behind Citigroup and Banco Pine 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.