Correlation Between Citigroup and Air New
Can any of the company-specific risk be diversified away by investing in both Citigroup and Air New 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 New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Air New Zealand, you can compare the effects of market volatilities on Citigroup and Air New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Air New.
Diversification Opportunities for Citigroup and Air New
Excellent diversification
The 3 months correlation between Citigroup and Air is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Citigroup i.e., Citigroup and Air New go up and down completely randomly.
Pair Corralation between Citigroup and Air New
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.47 times more return on investment than Air New. However, Citigroup is 2.12 times less risky than Air New. It trades about 0.23 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.12 per unit of risk. If you would invest 6,393 in Citigroup on August 31, 2024 and sell it today you would earn a total of 694.00 from holding Citigroup or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Air New Zealand
Performance |
| Timeline |
| Citigroup |
| Air New Zealand |
Citigroup and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Air New
The main advantage of trading using opposite Citigroup and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Air New vs. Copa Holdings SA | Air New vs. United Airlines Holdings | Air New vs. Delta Air Lines | Air New vs. SkyWest |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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