Correlation Between Citigroup and LandMark Optoelectronics
Can any of the company-specific risk be diversified away by investing in both Citigroup and LandMark Optoelectronics 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 LandMark Optoelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and LandMark Optoelectronics, you can compare the effects of market volatilities on Citigroup and LandMark Optoelectronics 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 LandMark Optoelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and LandMark Optoelectronics.
Diversification Opportunities for Citigroup and LandMark Optoelectronics
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and LandMark is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LandMark Optoelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LandMark Optoelectronics 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 LandMark Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LandMark Optoelectronics has no effect on the direction of Citigroup i.e., Citigroup and LandMark Optoelectronics go up and down completely randomly.
Pair Corralation between Citigroup and LandMark Optoelectronics
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.43 times more return on investment than LandMark Optoelectronics. However, Citigroup is 2.3 times less risky than LandMark Optoelectronics. It trades about 0.27 of its potential returns per unit of risk. LandMark Optoelectronics is currently generating about 0.02 per unit of risk. If you would invest 6,315 in Citigroup on September 2, 2024 and sell it today you would earn a total of 772.00 from holding Citigroup or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. LandMark Optoelectronics
Performance |
| Timeline |
| Citigroup |
| LandMark Optoelectronics |
Citigroup and LandMark Optoelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and LandMark Optoelectronics
The main advantage of trading using opposite Citigroup and LandMark Optoelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, LandMark Optoelectronics 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 LandMark Optoelectronics will offset losses from the drop in LandMark Optoelectronics' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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