Correlation Between Citigroup and Grupo Herdez
Can any of the company-specific risk be diversified away by investing in both Citigroup and Grupo Herdez 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 Grupo Herdez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Grupo Herdez SAB, you can compare the effects of market volatilities on Citigroup and Grupo Herdez 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 Grupo Herdez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Grupo Herdez.
Diversification Opportunities for Citigroup and Grupo Herdez
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Grupo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Grupo Herdez SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Herdez SAB 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 Grupo Herdez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Herdez SAB has no effect on the direction of Citigroup i.e., Citigroup and Grupo Herdez go up and down completely randomly.
Pair Corralation between Citigroup and Grupo Herdez
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.9 times more return on investment than Grupo Herdez. However, Citigroup is 1.12 times less risky than Grupo Herdez. It trades about 0.13 of its potential returns per unit of risk. Grupo Herdez SAB is currently generating about 0.04 per unit of risk. If you would invest 5,985 in Citigroup on September 25, 2024 and sell it today you would earn a total of 934.00 from holding Citigroup or generate 15.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 96.83% |
Values | Daily Returns |
Citigroup vs. Grupo Herdez SAB
Performance |
Timeline |
Citigroup |
Grupo Herdez SAB |
Citigroup and Grupo Herdez Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Grupo Herdez
The main advantage of trading using opposite Citigroup and Grupo Herdez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Grupo Herdez 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 Grupo Herdez will offset losses from the drop in Grupo Herdez's long position.The idea behind Citigroup and Grupo Herdez SAB 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.Grupo Herdez vs. Enphase Energy, | Grupo Herdez vs. Value Grupo Financiero | Grupo Herdez vs. Prudential plc | Grupo Herdez vs. Mastercard Incorporated |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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