Correlation Between Citigroup and KPX Chemical
Can any of the company-specific risk be diversified away by investing in both Citigroup and KPX Chemical 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 KPX Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and KPX Chemical, you can compare the effects of market volatilities on Citigroup and KPX Chemical 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 KPX Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and KPX Chemical.
Diversification Opportunities for Citigroup and KPX Chemical
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and KPX is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KPX Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Chemical 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 KPX Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Chemical has no effect on the direction of Citigroup i.e., Citigroup and KPX Chemical go up and down completely randomly.
Pair Corralation between Citigroup and KPX Chemical
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.81 times more return on investment than KPX Chemical. However, Citigroup is 1.81 times more volatile than KPX Chemical. It trades about 0.1 of its potential returns per unit of risk. KPX Chemical is currently generating about 0.01 per unit of risk. If you would invest 4,460 in Citigroup on September 12, 2024 and sell it today you would earn a total of 2,790 from holding Citigroup or generate 62.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.59% |
| Values | Daily Returns |
Citigroup vs. KPX Chemical
Performance |
| Timeline |
| Citigroup |
| KPX Chemical |
Citigroup and KPX Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and KPX Chemical
The main advantage of trading using opposite Citigroup and KPX Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, KPX Chemical 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 KPX Chemical will offset losses from the drop in KPX Chemical's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| KPX Chemical vs. Kbi Metal Co | KPX Chemical vs. Polaris Office Corp | KPX Chemical vs. Derkwoo Electronics Co | KPX Chemical vs. Daejung Chemicals Metals |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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