Correlation Between Banco Bilbao and Citigroup
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and Citigroup 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 Banco Bilbao and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bilbao Viscaya and Citigroup, you can compare the effects of market volatilities on Banco Bilbao and Citigroup 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 Banco Bilbao with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Citigroup.
Diversification Opportunities for Banco Bilbao and Citigroup
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Banco and Citigroup is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Banco Bilbao 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 Banco Bilbao Viscaya are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Citigroup go up and down completely randomly.
Pair Corralation between Banco Bilbao and Citigroup
Given the investment horizon of 90 days Banco Bilbao is expected to generate 1.33 times less return on investment than Citigroup. In addition to that, Banco Bilbao is 1.6 times more volatile than Citigroup. It trades about 0.07 of its total potential returns per unit of risk. Citigroup is currently generating about 0.16 per unit of volatility. If you would invest 5,614 in Citigroup on February 2, 2024 and sell it today you would earn a total of 521.00 from holding Citigroup or generate 9.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Banco Bilbao Viscaya vs. Citigroup
Performance |
Timeline |
Banco Bilbao Viscaya |
Citigroup |
Banco Bilbao and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banco Bilbao and Citigroup
The main advantage of trading using opposite Banco Bilbao and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.Banco Bilbao vs. Barclays PLC ADR | Banco Bilbao vs. ING Group NV | Banco Bilbao vs. Banco Santander SA | Banco Bilbao vs. HSBC Holdings PLC |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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