Correlation Between Citigroup and Trio Tech
Can any of the company-specific risk be diversified away by investing in both Citigroup and Trio Tech 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 Trio Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Trio Tech International, you can compare the effects of market volatilities on Citigroup and Trio Tech 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 Trio Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Trio Tech.
Diversification Opportunities for Citigroup and Trio Tech
Very weak diversification
The 3 months correlation between Citigroup and Trio is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Trio Tech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Tech International 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 Trio Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Tech International has no effect on the direction of Citigroup i.e., Citigroup and Trio Tech go up and down completely randomly.
Pair Corralation between Citigroup and Trio Tech
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.59 times more return on investment than Trio Tech. However, Citigroup is 1.71 times less risky than Trio Tech. It trades about -0.03 of its potential returns per unit of risk. Trio Tech International is currently generating about -0.23 per unit of risk. If you would invest 6,984 in Citigroup on September 23, 2024 and sell it today you would lose (65.00) from holding Citigroup or give up 0.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Trio Tech International
Performance |
Timeline |
Citigroup |
Trio Tech International |
Citigroup and Trio Tech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Trio Tech
The main advantage of trading using opposite Citigroup and Trio Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Trio Tech 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 Trio Tech will offset losses from the drop in Trio Tech's long position.Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Montreal |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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