Correlation Between Citigroup and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both Citigroup and Airtel Africa 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 Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Airtel Africa Plc, you can compare the effects of market volatilities on Citigroup and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Airtel Africa.
Diversification Opportunities for Citigroup and Airtel Africa
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Airtel is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc 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 Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of Citigroup i.e., Citigroup and Airtel Africa go up and down completely randomly.
Pair Corralation between Citigroup and Airtel Africa
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.24 times less return on investment than Airtel Africa. But when comparing it to its historical volatility, Citigroup is 2.5 times less risky than Airtel Africa. It trades about 0.08 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 134.00 in Airtel Africa Plc on November 9, 2024 and sell it today you would earn a total of 62.00 from holding Airtel Africa Plc or generate 46.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Airtel Africa Plc
Performance |
| Timeline |
| Citigroup |
| Airtel Africa Plc |
Citigroup and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Airtel Africa
The main advantage of trading using opposite Citigroup and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |