Correlation Between Citigroup and HANA Micron
Can any of the company-specific risk be diversified away by investing in both Citigroup and HANA Micron 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 HANA Micron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and HANA Micron, you can compare the effects of market volatilities on Citigroup and HANA Micron 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 HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and HANA Micron.
Diversification Opportunities for Citigroup and HANA Micron
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and HANA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of Citigroup i.e., Citigroup and HANA Micron go up and down completely randomly.
Pair Corralation between Citigroup and HANA Micron
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.59 times less return on investment than HANA Micron. But when comparing it to its historical volatility, Citigroup is 2.76 times less risky than HANA Micron. It trades about 0.15 of its potential returns per unit of risk. HANA Micron is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 990,000 in HANA Micron on November 27, 2024 and sell it today you would earn a total of 179,000 from holding HANA Micron or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. HANA Micron
Performance |
| Timeline |
| Citigroup |
| HANA Micron |
Citigroup and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and HANA Micron
The main advantage of trading using opposite Citigroup and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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