Correlation Between Citigroup and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both Citigroup and L3Harris Technologies 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 L3Harris Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and L3Harris Technologies, you can compare the effects of market volatilities on Citigroup and L3Harris Technologies 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 L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and L3Harris Technologies.
Diversification Opportunities for Citigroup and L3Harris Technologies
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and L3Harris is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Citigroup i.e., Citigroup and L3Harris Technologies go up and down completely randomly.
Pair Corralation between Citigroup and L3Harris Technologies
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.11 times more return on investment than L3Harris Technologies. However, Citigroup is 1.11 times more volatile than L3Harris Technologies. It trades about 0.08 of its potential returns per unit of risk. L3Harris Technologies is currently generating about 0.06 per unit of risk. If you would invest 4,525 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,562 from holding Citigroup or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Citigroup vs. L3Harris Technologies
Performance |
| Timeline |
| Citigroup |
| L3Harris Technologies |
Citigroup and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and L3Harris Technologies
The main advantage of trading using opposite Citigroup and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| L3Harris Technologies vs. Monks Investment Trust | L3Harris Technologies vs. Broadridge Financial Solutions | L3Harris Technologies vs. Smithson Investment Trust | L3Harris Technologies vs. Trainline Plc |
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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