Correlation Between Citigroup and Kone Oyj
Can any of the company-specific risk be diversified away by investing in both Citigroup and Kone Oyj 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 Kone Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Kone Oyj ADR, you can compare the effects of market volatilities on Citigroup and Kone Oyj 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 Kone Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Kone Oyj.
Diversification Opportunities for Citigroup and Kone Oyj
Modest diversification
The 3 months correlation between Citigroup and Kone is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Kone Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kone Oyj 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 Kone Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kone Oyj ADR has no effect on the direction of Citigroup i.e., Citigroup and Kone Oyj go up and down completely randomly.
Pair Corralation between Citigroup and Kone Oyj
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.23 times more return on investment than Kone Oyj. However, Citigroup is 1.23 times more volatile than Kone Oyj ADR. It trades about 0.13 of its potential returns per unit of risk. Kone Oyj ADR is currently generating about 0.1 per unit of risk. If you would invest 7,090 in Citigroup on December 1, 2024 and sell it today you would earn a total of 905.00 from holding Citigroup or generate 12.76% 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. Kone Oyj ADR
Performance |
Timeline |
Citigroup |
Kone Oyj ADR |
Citigroup and Kone Oyj Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Kone Oyj
The main advantage of trading using opposite Citigroup and Kone Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Kone Oyj 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 Kone Oyj will offset losses from the drop in Kone Oyj'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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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