Correlation Between Citigroup and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aristocrat Leisure 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 Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aristocrat Leisure Limited, you can compare the effects of market volatilities on Citigroup and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aristocrat Leisure.
Diversification Opportunities for Citigroup and Aristocrat Leisure
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Aristocrat is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Citigroup i.e., Citigroup and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Citigroup and Aristocrat Leisure
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.28 times less return on investment than Aristocrat Leisure. But when comparing it to its historical volatility, Citigroup is 1.07 times less risky than Aristocrat Leisure. It trades about 0.07 of its potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,132 in Aristocrat Leisure Limited on August 26, 2024 and sell it today you would earn a total of 2,028 from holding Aristocrat Leisure Limited or generate 95.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.22% |
| Values | Daily Returns |
Citigroup vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| Citigroup |
| Aristocrat Leisure |
Citigroup and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aristocrat Leisure
The main advantage of trading using opposite Citigroup and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Aristocrat Leisure vs. Scandinavian Tobacco Group | Aristocrat Leisure vs. Verizon Communications | Aristocrat Leisure vs. COMPUTERSHARE | Aristocrat Leisure vs. HEMISPHERE EGY |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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