Correlation Between Citigroup and RCE Capital
Can any of the company-specific risk be diversified away by investing in both Citigroup and RCE Capital 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 RCE Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and RCE Capital Berhad, you can compare the effects of market volatilities on Citigroup and RCE Capital 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 RCE Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and RCE Capital.
Diversification Opportunities for Citigroup and RCE Capital
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and RCE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and RCE Capital Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCE Capital Berhad 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 RCE Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCE Capital Berhad has no effect on the direction of Citigroup i.e., Citigroup and RCE Capital go up and down completely randomly.
Pair Corralation between Citigroup and RCE Capital
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.26 times more return on investment than RCE Capital. However, Citigroup is 2.26 times more volatile than RCE Capital Berhad. It trades about 0.45 of its potential returns per unit of risk. RCE Capital Berhad is currently generating about -0.24 per unit of risk. If you would invest 6,977 in Citigroup on October 23, 2024 and sell it today you would earn a total of 1,190 from holding Citigroup or generate 17.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Citigroup vs. RCE Capital Berhad
Performance |
| Timeline |
| Citigroup |
| RCE Capital Berhad |
Citigroup and RCE Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and RCE Capital
The main advantage of trading using opposite Citigroup and RCE Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, RCE Capital 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 RCE Capital will offset losses from the drop in RCE Capital's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| RCE Capital vs. Star Media Group | RCE Capital vs. Ho Hup Construction | RCE Capital vs. Apollo Food Holdings | RCE Capital vs. Southern Steel Bhd |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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