Correlation Between Citigroup and Aryzta AG
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aryzta AG 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 Aryzta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aryzta AG PK, you can compare the effects of market volatilities on Citigroup and Aryzta AG 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 Aryzta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aryzta AG.
Diversification Opportunities for Citigroup and Aryzta AG
Pay attention - limited upside
The 3 months correlation between Citigroup and Aryzta is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aryzta AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryzta AG PK 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 Aryzta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryzta AG PK has no effect on the direction of Citigroup i.e., Citigroup and Aryzta AG go up and down completely randomly.
Pair Corralation between Citigroup and Aryzta AG
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.75 times more return on investment than Aryzta AG. However, Citigroup is 1.33 times less risky than Aryzta AG. It trades about 0.21 of its potential returns per unit of risk. Aryzta AG PK 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 623.00 from holding Citigroup or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Aryzta AG PK
Performance |
| Timeline |
| Citigroup |
| Aryzta AG PK |
Citigroup and Aryzta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aryzta AG
The main advantage of trading using opposite Citigroup and Aryzta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aryzta AG 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 Aryzta AG will offset losses from the drop in Aryzta AG's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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