Correlation Between Citigroup and Darden Restaurants,

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

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

Diversification Opportunities for Citigroup and Darden Restaurants,

0.54

Correlation Coefficient

Citigroup  Darden Restaurants,

Very weak diversification

The 3 months correlation between Citigroup and Darden is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Darden Restaurants, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants, 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 Darden Restaurants,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants, has no effect on the direction of Citigroup i.e., Citigroup and Darden Restaurants, go up and down completely randomly.

Pair Corralation between Citigroup and Darden Restaurants,

Taking into account the 90-day investment horizon Citigroup is expected to generate 10.08 times more return on investment than Darden Restaurants,. However, Citigroup is 10.08 times more volatile than Darden Restaurants,. It trades about 0.41 of its potential returns per unit of risk. Darden Restaurants, is currently generating about 0.01 per unit of risk. If you would invest  6,977  in Citigroup on October 23, 2024 and sell it today you would earn a total of  1,022  from holding Citigroup or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Citigroup  vs.  Darden Restaurants,

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Darden Restaurants,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Darden Restaurants, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Darden Restaurants,

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

The idea behind Citigroup and Darden Restaurants, 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.