Correlation Between Citigroup and KPX Green
Can any of the company-specific risk be diversified away by investing in both Citigroup and KPX Green 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 Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and KPX Green Chemical, you can compare the effects of market volatilities on Citigroup and KPX Green 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 Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and KPX Green.
Diversification Opportunities for Citigroup and KPX Green
Good diversification
The 3 months correlation between Citigroup and KPX is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green 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 Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of Citigroup i.e., Citigroup and KPX Green go up and down completely randomly.
Pair Corralation between Citigroup and KPX Green
Taking into account the 90-day investment horizon Citigroup is expected to generate 53.87 times less return on investment than KPX Green. But when comparing it to its historical volatility, Citigroup is 3.76 times less risky than KPX Green. It trades about 0.03 of its potential returns per unit of risk. KPX Green Chemical is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 478,442 in KPX Green Chemical on October 14, 2024 and sell it today you would earn a total of 219,558 from holding KPX Green Chemical or generate 45.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. KPX Green Chemical
Performance |
| Timeline |
| Citigroup |
| KPX Green Chemical |
Citigroup and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and KPX Green
The main advantage of trading using opposite Citigroup and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, KPX Green 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 Green will offset losses from the drop in KPX Green's long position.| Citigroup vs. Nu Holdings | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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