Correlation Between Citigroup and SPROUTS FARMERS
Can any of the company-specific risk be diversified away by investing in both Citigroup and SPROUTS FARMERS 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 SPROUTS FARMERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and SPROUTS FARMERS MKT, you can compare the effects of market volatilities on Citigroup and SPROUTS FARMERS 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 SPROUTS FARMERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SPROUTS FARMERS.
Diversification Opportunities for Citigroup and SPROUTS FARMERS
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and SPROUTS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SPROUTS FARMERS MKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPROUTS FARMERS MKT 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 SPROUTS FARMERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPROUTS FARMERS MKT has no effect on the direction of Citigroup i.e., Citigroup and SPROUTS FARMERS go up and down completely randomly.
Pair Corralation between Citigroup and SPROUTS FARMERS
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.76 times more return on investment than SPROUTS FARMERS. However, Citigroup is 1.32 times less risky than SPROUTS FARMERS. It trades about 0.23 of its potential returns per unit of risk. SPROUTS FARMERS MKT is currently generating about -0.01 per unit of risk. If you would invest 7,087 in Citigroup on October 30, 2024 and sell it today you would earn a total of 1,020 from holding Citigroup or generate 14.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.37% |
| Values | Daily Returns |
Citigroup vs. SPROUTS FARMERS MKT
Performance |
| Timeline |
| Citigroup |
| SPROUTS FARMERS MKT |
Citigroup and SPROUTS FARMERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and SPROUTS FARMERS
The main advantage of trading using opposite Citigroup and SPROUTS FARMERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, SPROUTS FARMERS 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 SPROUTS FARMERS will offset losses from the drop in SPROUTS FARMERS's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| SPROUTS FARMERS vs. Align Technology | SPROUTS FARMERS vs. Easy Software AG | SPROUTS FARMERS vs. Charter Communications | SPROUTS FARMERS vs. ARROW ELECTRONICS |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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