Correlation Between Citigroup and Cool
Can any of the company-specific risk be diversified away by investing in both Citigroup and Cool 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 Cool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Cool Company, you can compare the effects of market volatilities on Citigroup and Cool 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 Cool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Cool.
Diversification Opportunities for Citigroup and Cool
Modest diversification
The 3 months correlation between Citigroup and Cool is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company 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 Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of Citigroup i.e., Citigroup and Cool go up and down completely randomly.
Pair Corralation between Citigroup and Cool
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.61 times more return on investment than Cool. However, Citigroup is 1.64 times less risky than Cool. It trades about 0.09 of its potential returns per unit of risk. Cool Company is currently generating about -0.15 per unit of risk. If you would invest 7,101 in Citigroup on December 4, 2024 and sell it today you would earn a total of 616.00 from holding Citigroup or generate 8.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Cool Company
Performance |
Timeline |
Citigroup |
Cool Company |
Citigroup and Cool Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Cool
The main advantage of trading using opposite Citigroup and Cool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Cool 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 Cool will offset losses from the drop in Cool's long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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