Correlation Between Citigroup and Grazziotin

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

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

Diversification Opportunities for Citigroup and Grazziotin

0.25

Correlation Coefficient

Citigroup  Grazziotin

Modest diversification

The 3 months correlation between Citigroup and Grazziotin is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Grazziotin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grazziotin 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 Grazziotin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grazziotin SA has no effect on the direction of Citigroup i.e., Citigroup and Grazziotin go up and down completely randomly.

Pair Corralation between Citigroup and Grazziotin

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.06 times more return on investment than Grazziotin. However, Citigroup is 1.06 times more volatile than Grazziotin SA. It trades about 0.13 of its potential returns per unit of risk. Grazziotin SA is currently generating about 0.08 per unit of risk. If you would invest  6,133  in Citigroup on September 27, 2024 and sell it today you would earn a total of  967.00  from holding Citigroup or generate 15.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Citigroup  vs.  Grazziotin 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.

Grazziotin SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grazziotin SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grazziotin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Grazziotin

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

The idea behind Citigroup and Grazziotin 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.