Correlation Between Citigroup and REX FANG
Can any of the company-specific risk be diversified away by investing in both Citigroup and REX FANG 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 REX FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and REX FANG Innovation, you can compare the effects of market volatilities on Citigroup and REX FANG 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 REX FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and REX FANG.
Diversification Opportunities for Citigroup and REX FANG
Very weak diversification
The 3 months correlation between Citigroup and REX is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation 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 REX FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of Citigroup i.e., Citigroup and REX FANG go up and down completely randomly.
Pair Corralation between Citigroup and REX FANG
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times more return on investment than REX FANG. However, Citigroup is 1.37 times more volatile than REX FANG Innovation. It trades about 0.04 of its potential returns per unit of risk. REX FANG Innovation is currently generating about -0.08 per unit of risk. If you would invest 6,765 in Citigroup on December 18, 2024 and sell it today you would earn a total of 229.00 from holding Citigroup or generate 3.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. REX FANG Innovation
Performance |
Timeline |
Citigroup |
REX FANG Innovation |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Citigroup and REX FANG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and REX FANG
The main advantage of trading using opposite Citigroup and REX FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, REX FANG 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 REX FANG will offset losses from the drop in REX FANG'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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