Correlation Between Applied Materials and Citigroup
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Citigroup, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Citigroup.
Diversification Opportunities for Applied Materials and Citigroup
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and Citigroup is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Applied Materials 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 Applied Materials 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 Applied Materials i.e., Applied Materials and Citigroup go up and down completely randomly.
Pair Corralation between Applied Materials and Citigroup
Assuming the 90 days trading horizon Applied Materials is expected to generate 1.46 times less return on investment than Citigroup. In addition to that, Applied Materials is 1.45 times more volatile than Citigroup. It trades about 0.06 of its total potential returns per unit of risk. Citigroup is currently generating about 0.13 per unit of volatility. If you would invest 81,977 in Citigroup on September 3, 2024 and sell it today you would earn a total of 62,023 from holding Citigroup or generate 75.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Citigroup
Performance |
| Timeline |
| Applied Materials |
| Citigroup |
Applied Materials and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Citigroup
The main advantage of trading using opposite Applied Materials and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.| Applied Materials vs. The Select Sector | Applied Materials vs. Promotora y Operadora | Applied Materials vs. SPDR Series Trust | Applied Materials vs. Vanguard World |
| Citigroup vs. Verizon Communications | Citigroup vs. Cognizant Technology Solutions | Citigroup vs. United States Steel | Citigroup vs. Applied Materials |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |