Correlation Between Check Point and Citigroup
Can any of the company-specific risk be diversified away by investing in both Check Point and Citigroup 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 Check Point and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and Citigroup, you can compare the effects of market volatilities on Check Point and Citigroup 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 Check Point with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Citigroup.
Diversification Opportunities for Check Point and Citigroup
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Citigroup is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Check Point 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 Check Point Software are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Check Point i.e., Check Point and Citigroup go up and down completely randomly.
Pair Corralation between Check Point and Citigroup
Assuming the 90 days trading horizon Check Point is expected to generate 1.6 times less return on investment than Citigroup. But when comparing it to its historical volatility, Check Point Software is 1.06 times less risky than Citigroup. It trades about 0.07 of its potential returns per unit of risk. Citigroup is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,895 in Citigroup on September 14, 2024 and sell it today you would earn a total of 2,301 from holding Citigroup or generate 47.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Check Point Software vs. Citigroup
Performance |
| Timeline |
| Check Point Software |
| Citigroup |
Check Point and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Citigroup
The main advantage of trading using opposite Check Point and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.| Check Point vs. Trainline Plc | Check Point vs. Charter Communications Cl | Check Point vs. Roadside Real Estate | Check Point vs. Kaufman Et Broad |
| Citigroup vs. BE Semiconductor Industries | Citigroup vs. Accsys Technologies PLC | Citigroup vs. Eastinco Mining Exploration | Citigroup vs. Raytheon Technologies Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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