Correlation Between Citigroup and Paccar
Can any of the company-specific risk be diversified away by investing in both Citigroup and Paccar 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 Paccar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Paccar Inc, you can compare the effects of market volatilities on Citigroup and Paccar 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 Paccar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Paccar.
Diversification Opportunities for Citigroup and Paccar
Almost no diversification
The 3 months correlation between Citigroup and Paccar is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Paccar Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paccar Inc 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 Paccar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paccar Inc has no effect on the direction of Citigroup i.e., Citigroup and Paccar go up and down completely randomly.
Pair Corralation between Citigroup and Paccar
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.06 times less return on investment than Paccar. But when comparing it to its historical volatility, Citigroup is 1.14 times less risky than Paccar. It trades about 0.26 of its potential returns per unit of risk. Paccar Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 10,394 in Paccar Inc on September 1, 2024 and sell it today you would earn a total of 1,306 from holding Paccar Inc or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Paccar Inc
Performance |
| Timeline |
| Citigroup |
| Paccar Inc |
Citigroup and Paccar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Paccar
The main advantage of trading using opposite Citigroup and Paccar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Paccar 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 Paccar will offset losses from the drop in Paccar's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Paccar vs. Sligro Food Group | Paccar vs. Spirent Communications plc | Paccar vs. Leroy Seafood Group | Paccar vs. Roebuck Food Group |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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