Correlation Between Citigroup and First Solar
Can any of the company-specific risk be diversified away by investing in both Citigroup and First Solar 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 First Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and First Solar, you can compare the effects of market volatilities on Citigroup and First Solar 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 First Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and First Solar.
Diversification Opportunities for Citigroup and First Solar
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and First is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar 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 First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of Citigroup i.e., Citigroup and First Solar go up and down completely randomly.
Pair Corralation between Citigroup and First Solar
Given the investment horizon of 90 days Citigroup is expected to generate 0.76 times more return on investment than First Solar. However, Citigroup is 1.32 times less risky than First Solar. It trades about 0.23 of its potential returns per unit of risk. First Solar is currently generating about -0.23 per unit of risk. If you would invest 149,142 in Citigroup on November 8, 2024 and sell it today you would earn a total of 14,858 from holding Citigroup or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. First Solar
Performance |
| Timeline |
| Citigroup |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| First Solar |
Citigroup and First Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and First Solar
The main advantage of trading using opposite Citigroup and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, First Solar 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 First Solar will offset losses from the drop in First Solar's long position.| Citigroup vs. Genworth Financial | Citigroup vs. Monster Beverage Corp | Citigroup vs. Air Transport Services | Citigroup vs. Verizon Communications |
| First Solar vs. Applied Materials | First Solar vs. Verizon Communications | First Solar vs. CVS Health | First Solar vs. The Bank of |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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