Correlation Between Citigroup and Laboratorio Reig

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Laboratorio Reig 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 Laboratorio Reig into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Laboratorio Reig Jofre, you can compare the effects of market volatilities on Citigroup and Laboratorio Reig 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 Laboratorio Reig. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Laboratorio Reig.

Diversification Opportunities for Citigroup and Laboratorio Reig

0.71
  Correlation Coefficient

Poor diversification

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

Pair Corralation between Citigroup and Laboratorio Reig

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.6 times more return on investment than Laboratorio Reig. However, Citigroup is 1.66 times less risky than Laboratorio Reig. It trades about 0.58 of its potential returns per unit of risk. Laboratorio Reig Jofre is currently generating about 0.07 per unit of risk. If you would invest  5,571  in Citigroup on December 29, 2023 and sell it today you would earn a total of  753.00  from holding Citigroup or generate 13.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Laboratorio Reig Jofre

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
Laboratorio Reig Jofre 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Laboratorio Reig Jofre are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Laboratorio Reig may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Citigroup and Laboratorio Reig Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Laboratorio Reig

The main advantage of trading using opposite Citigroup and Laboratorio Reig positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Laboratorio Reig 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 Laboratorio Reig will offset losses from the drop in Laboratorio Reig's long position.
The idea behind Citigroup and Laboratorio Reig Jofre 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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