Correlation Between Citigroup and Xinyi Solar
Can any of the company-specific risk be diversified away by investing in both Citigroup and Xinyi Solar 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 Xinyi Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Xinyi Solar Holdings, you can compare the effects of market volatilities on Citigroup and Xinyi Solar 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 Xinyi Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Xinyi Solar.
Diversification Opportunities for Citigroup and Xinyi Solar
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Xinyi is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Xinyi Solar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Solar Holdings 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 Xinyi Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Solar Holdings has no effect on the direction of Citigroup i.e., Citigroup and Xinyi Solar go up and down completely randomly.
Pair Corralation between Citigroup and Xinyi Solar
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.69 times less return on investment than Xinyi Solar. But when comparing it to its historical volatility, Citigroup is 3.3 times less risky than Xinyi Solar. It trades about 0.11 of its potential returns per unit of risk. Xinyi Solar Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Xinyi Solar Holdings on September 3, 2024 and sell it today you would earn a total of 14.00 from holding Xinyi Solar Holdings or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Citigroup vs. Xinyi Solar Holdings
Performance |
| Timeline |
| Citigroup |
| Xinyi Solar Holdings |
Citigroup and Xinyi Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Xinyi Solar
The main advantage of trading using opposite Citigroup and Xinyi Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Xinyi Solar 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 Xinyi Solar will offset losses from the drop in Xinyi Solar's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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