Correlation Between Citigroup and Leggett Platt
Can any of the company-specific risk be diversified away by investing in both Citigroup and Leggett Platt 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 Leggett Platt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Leggett Platt, you can compare the effects of market volatilities on Citigroup and Leggett Platt 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 Leggett Platt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Leggett Platt.
Diversification Opportunities for Citigroup and Leggett Platt
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Leggett is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Leggett Platt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggett Platt 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 Leggett Platt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggett Platt has no effect on the direction of Citigroup i.e., Citigroup and Leggett Platt go up and down completely randomly.
Pair Corralation between Citigroup and Leggett Platt
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.26 times more return on investment than Leggett Platt. However, Citigroup is 3.84 times less risky than Leggett Platt. It trades about 0.2 of its potential returns per unit of risk. Leggett Platt is currently generating about -0.03 per unit of risk. If you would invest 6,902 in Citigroup on September 13, 2024 and sell it today you would earn a total of 241.00 from holding Citigroup or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Leggett Platt
Performance |
| Timeline |
| Citigroup |
| Leggett Platt |
Citigroup and Leggett Platt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Leggett Platt
The main advantage of trading using opposite Citigroup and Leggett Platt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Leggett Platt 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 Leggett Platt will offset losses from the drop in Leggett Platt's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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