Correlation Between Crdito Real and Citigroup

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

By analyzing existing cross correlation between Crdito Real SAB and Citigroup, you can compare the effects of market volatilities on Crdito Real and Citigroup 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 Crdito Real with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crdito Real and Citigroup.

Diversification Opportunities for Crdito Real and Citigroup

0.0

Correlation Coefficient

Crdito Real  Citigroup

Pay attention - limited upside

The 3 months correlation between Crdito and Citigroup is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Crdito Real SAB and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Crdito Real 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 Crdito Real SAB are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Crdito Real i.e., Crdito Real and Citigroup go up and down completely randomly.

Pair Corralation between Crdito Real and Citigroup

If you would invest  143,233  in Citigroup on October 13, 2024 and sell it today you would earn a total of  4,767  from holding Citigroup or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Crdito Real SAB  vs.  Citigroup

Crdito Real SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdito Real SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Crdito Real is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 fairly weak primary indicators, Citigroup showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crdito Real and Citigroup

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

The idea behind Crdito Real SAB and Citigroup 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.