Correlation Between Citigroup and Lavvi Empreendimentos

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

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

Diversification Opportunities for Citigroup and Lavvi Empreendimentos

0.26

Correlation Coefficient

Citigroup  Lavvi Empreendimentos

Modest diversification

The 3 months correlation between Citigroup and Lavvi is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lavvi Empreendimentos Imobilir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavvi Empreendimentos 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 Lavvi Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavvi Empreendimentos has no effect on the direction of Citigroup i.e., Citigroup and Lavvi Empreendimentos go up and down completely randomly.

Pair Corralation between Citigroup and Lavvi Empreendimentos

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times less return on investment than Lavvi Empreendimentos. But when comparing it to its historical volatility, Citigroup is 1.33 times less risky than Lavvi Empreendimentos. It trades about 0.07 of its potential returns per unit of risk. Lavvi Empreendimentos Imobilirios is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  389.00  in Lavvi Empreendimentos Imobilirios on September 26, 2024 and sell it today you would earn a total of  369.00  from holding Lavvi Empreendimentos Imobilirios or generate 94.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

Citigroup  vs.  Lavvi Empreendimentos Imobilir

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.

Lavvi Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lavvi Empreendimentos Imobilirios has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lavvi Empreendimentos is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Lavvi Empreendimentos

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

The idea behind Citigroup and Lavvi Empreendimentos Imobilirios 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.