Correlation Between Itasa Investimentos and Citizens Financial

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

By analyzing existing cross correlation between Itasa Investimentos and Citizens Financial Group,, you can compare the effects of market volatilities on Itasa Investimentos and Citizens Financial 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 Itasa Investimentos with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itasa Investimentos and Citizens Financial.

Diversification Opportunities for Itasa Investimentos and Citizens Financial

-0.71

Correlation Coefficient

Itasa Investimentos  Citizens Financial

Pay attention - limited upside

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

Pair Corralation between Itasa Investimentos and Citizens Financial

Assuming the 90 days trading horizon Itasa Investimentos is expected to under-perform the Citizens Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Itasa Investimentos is 1.28 times less risky than Citizens Financial. The preferred stock trades about -0.34 of its potential returns per unit of risk. The Citizens Financial Group, is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  28,221  in Citizens Financial Group, on October 6, 2024 and sell it today you would lose (1,250) from holding Citizens Financial Group, or give up 4.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Itasa Investimentos  vs.  Citizens Financial Group,

Itasa Investimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itasa Investimentos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Citizens Financial Group,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citizens Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itasa Investimentos and Citizens Financial

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

The idea behind Itasa Investimentos and Citizens Financial Group, 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.