Correlation Between Citigroup and Hexcel
Can any of the company-specific risk be diversified away by investing in both Citigroup and Hexcel 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 Hexcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Hexcel, you can compare the effects of market volatilities on Citigroup and Hexcel 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 Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hexcel.
Diversification Opportunities for Citigroup and Hexcel
Poor diversification
The 3 months correlation between Citigroup and Hexcel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Citigroup i.e., Citigroup and Hexcel go up and down completely randomly.
Pair Corralation between Citigroup and Hexcel
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.07 times more return on investment than Hexcel. However, Citigroup is 1.07 times more volatile than Hexcel. It trades about 0.03 of its potential returns per unit of risk. Hexcel is currently generating about -0.07 per unit of risk. If you would invest 6,991 in Citigroup on December 28, 2024 and sell it today you would earn a total of 194.00 from holding Citigroup or generate 2.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 96.77% |
Values | Daily Returns |
Citigroup vs. Hexcel
Performance |
Timeline |
Citigroup |
Hexcel |
Citigroup and Hexcel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Hexcel
The main advantage of trading using opposite Citigroup and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.Citigroup vs. PJT Partners | Citigroup vs. National Bank Holdings | Citigroup vs. FB Financial Corp | Citigroup vs. Northrim BanCorp |
Hexcel vs. Transport International Holdings | Hexcel vs. Nishi Nippon Railroad Co | Hexcel vs. BROADSTNET LEADL 00025 | Hexcel vs. Gold Road Resources |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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