Correlation Between Citigroup and SHOPRITE HDGS
Can any of the company-specific risk be diversified away by investing in both Citigroup and SHOPRITE HDGS 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 SHOPRITE HDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and SHOPRITE HDGS ADR, you can compare the effects of market volatilities on Citigroup and SHOPRITE HDGS 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 SHOPRITE HDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SHOPRITE HDGS.
Diversification Opportunities for Citigroup and SHOPRITE HDGS
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and SHOPRITE is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SHOPRITE HDGS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHOPRITE HDGS ADR 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 SHOPRITE HDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHOPRITE HDGS ADR has no effect on the direction of Citigroup i.e., Citigroup and SHOPRITE HDGS go up and down completely randomly.
Pair Corralation between Citigroup and SHOPRITE HDGS
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.78 times more return on investment than SHOPRITE HDGS. However, Citigroup is 1.29 times less risky than SHOPRITE HDGS. It trades about 0.09 of its potential returns per unit of risk. SHOPRITE HDGS ADR is currently generating about -0.01 per unit of risk. If you would invest 7,186 in Citigroup on October 10, 2024 and sell it today you would earn a total of 182.00 from holding Citigroup or generate 2.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 85.71% |
Values | Daily Returns |
Citigroup vs. SHOPRITE HDGS ADR
Performance |
Timeline |
Citigroup |
SHOPRITE HDGS ADR |
Citigroup and SHOPRITE HDGS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and SHOPRITE HDGS
The main advantage of trading using opposite Citigroup and SHOPRITE HDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, SHOPRITE HDGS 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 SHOPRITE HDGS will offset losses from the drop in SHOPRITE HDGS'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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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