Correlation Between Citigroup and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Citigroup and LPKF Laser 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 LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and LPKF Laser Electronics, you can compare the effects of market volatilities on Citigroup and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and LPKF Laser.
Diversification Opportunities for Citigroup and LPKF Laser
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and LPKF is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics 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 LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Citigroup i.e., Citigroup and LPKF Laser go up and down completely randomly.
Pair Corralation between Citigroup and LPKF Laser
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.09 times more return on investment than LPKF Laser. However, Citigroup is 3.09 times more volatile than LPKF Laser Electronics. It trades about 0.26 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.15 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. LPKF Laser Electronics
Performance |
| Timeline |
| Citigroup |
| LPKF Laser Electronics |
Citigroup and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and LPKF Laser
The main advantage of trading using opposite Citigroup and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| LPKF Laser vs. Coor Service Management | LPKF Laser vs. Empire Metals Limited | LPKF Laser vs. Adriatic Metals | LPKF Laser vs. Golden Metal Resources |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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