Correlation Between Citigroup and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Citigroup and Olympic Steel 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 Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Olympic Steel, you can compare the effects of market volatilities on Citigroup and Olympic Steel 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 Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Olympic Steel.
Diversification Opportunities for Citigroup and Olympic Steel
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Olympic is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Citigroup i.e., Citigroup and Olympic Steel go up and down completely randomly.
Pair Corralation between Citigroup and Olympic Steel
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.76 times more return on investment than Olympic Steel. However, Citigroup is 1.31 times less risky than Olympic Steel. It trades about 0.04 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.04 per unit of risk. If you would invest 6,929 in Citigroup on December 22, 2024 and sell it today you would earn a total of 269.00 from holding Citigroup or generate 3.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Olympic Steel
Performance |
Timeline |
Citigroup |
Olympic Steel |
Citigroup and Olympic Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Olympic Steel
The main advantage of trading using opposite Citigroup and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel'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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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