Correlation Between Citigroup and CLOUDFLARE INC
Can any of the company-specific risk be diversified away by investing in both Citigroup and CLOUDFLARE INC 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 CLOUDFLARE INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CLOUDFLARE INC A, you can compare the effects of market volatilities on Citigroup and CLOUDFLARE INC 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 CLOUDFLARE INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CLOUDFLARE INC.
Diversification Opportunities for Citigroup and CLOUDFLARE INC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and CLOUDFLARE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CLOUDFLARE INC A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLOUDFLARE INC A 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 CLOUDFLARE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLOUDFLARE INC A has no effect on the direction of Citigroup i.e., Citigroup and CLOUDFLARE INC go up and down completely randomly.
Pair Corralation between Citigroup and CLOUDFLARE INC
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the CLOUDFLARE INC. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.09 times less risky than CLOUDFLARE INC. The stock trades about -0.09 of its potential returns per unit of risk. The CLOUDFLARE INC A is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,198 in CLOUDFLARE INC A on September 24, 2024 and sell it today you would earn a total of 232.00 from holding CLOUDFLARE INC A or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. CLOUDFLARE INC A
Performance |
| Timeline |
| Citigroup |
| CLOUDFLARE INC A |
Citigroup and CLOUDFLARE INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CLOUDFLARE INC
The main advantage of trading using opposite Citigroup and CLOUDFLARE INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CLOUDFLARE INC 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 CLOUDFLARE INC will offset losses from the drop in CLOUDFLARE INC's long position.The idea behind Citigroup and CLOUDFLARE INC A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CLOUDFLARE INC vs. Apple Inc | CLOUDFLARE INC vs. Apple Inc | CLOUDFLARE INC vs. Apple Inc | CLOUDFLARE INC vs. Apple Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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