Correlation Between Citigroup and Corteva
Can any of the company-specific risk be diversified away by investing in both Citigroup and Corteva 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 Corteva into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Corteva, you can compare the effects of market volatilities on Citigroup and Corteva 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 Corteva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Corteva.
Diversification Opportunities for Citigroup and Corteva
Poor diversification
The 3 months correlation between Citigroup and Corteva is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva 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 Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Citigroup i.e., Citigroup and Corteva go up and down completely randomly.
Pair Corralation between Citigroup and Corteva
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.07 times less return on investment than Corteva. But when comparing it to its historical volatility, Citigroup is 1.47 times less risky than Corteva. It trades about 0.13 of its potential returns per unit of risk. Corteva is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,996 in Corteva on September 3, 2024 and sell it today you would earn a total of 812.00 from holding Corteva or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Citigroup vs. Corteva
Performance |
| Timeline |
| Citigroup |
| Corteva |
Citigroup and Corteva Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Corteva
The main advantage of trading using opposite Citigroup and Corteva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Corteva 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 Corteva will offset losses from the drop in Corteva's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Corteva vs. Sekisui Chemical Co | Corteva vs. Eastman Chemical | Corteva vs. KINGBOARD CHEMICAL | Corteva vs. Sanyo Chemical Industries |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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