Correlation Between Citigroup and Air Products
Can any of the company-specific risk be diversified away by investing in both Citigroup and Air Products 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 Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Air Products and, you can compare the effects of market volatilities on Citigroup and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Air Products.
Diversification Opportunities for Citigroup and Air Products
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Air is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Citigroup i.e., Citigroup and Air Products go up and down completely randomly.
Pair Corralation between Citigroup and Air Products
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.04 times more return on investment than Air Products. However, Citigroup is 1.04 times more volatile than Air Products and. It trades about 0.06 of its potential returns per unit of risk. Air Products and is currently generating about 0.03 per unit of risk. If you would invest 4,790 in Citigroup on October 12, 2024 and sell it today you would earn a total of 2,536 from holding Citigroup or generate 52.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Citigroup vs. Air Products and
Performance |
| Timeline |
| Citigroup |
| Air Products |
Citigroup and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Air Products
The main advantage of trading using opposite Citigroup and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Air Products vs. Pure Storage, | Air Products vs. HCA Healthcare, | Air Products vs. Clover Health Investments, | Air Products vs. Cardinal Health, |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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