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
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Airtel is -0.89. 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 0.67 times more return on investment than Airtel Africa. However, Citigroup is 1.5 times less risky than Airtel Africa. It trades about 0.26 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.2 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| 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 |
| Airtel Africa vs. Skillful Craftsman Education | Airtel Africa vs. Titan International | Airtel Africa vs. Grupo Simec SAB | Airtel Africa vs. Haverty Furniture Companies |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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