Correlation Between Citigroup and Aldeyra
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aldeyra 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 Aldeyra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aldeyra, you can compare the effects of market volatilities on Citigroup and Aldeyra 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 Aldeyra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aldeyra.
Diversification Opportunities for Citigroup and Aldeyra
Pay attention - limited upside
The 3 months correlation between Citigroup and Aldeyra is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aldeyra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldeyra 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 Aldeyra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldeyra has no effect on the direction of Citigroup i.e., Citigroup and Aldeyra go up and down completely randomly.
Pair Corralation between Citigroup and Aldeyra
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.52 times more return on investment than Aldeyra. However, Citigroup is 1.92 times less risky than Aldeyra. It trades about 0.14 of its potential returns per unit of risk. Aldeyra is currently generating about -0.05 per unit of risk. If you would invest 6,205 in Citigroup on August 29, 2024 and sell it today you would earn a total of 770.00 from holding Citigroup or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Aldeyra
Performance |
| Timeline |
| Citigroup |
| Aldeyra |
Citigroup and Aldeyra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aldeyra
The main advantage of trading using opposite Citigroup and Aldeyra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aldeyra 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 Aldeyra will offset losses from the drop in Aldeyra's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Aldeyra vs. Tarsus Pharmaceuticals | Aldeyra vs. Travere Therapeutics | Aldeyra vs. Eton Pharmaceuticals | Aldeyra vs. Viridian Therapeutics |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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