Correlation Between Citigroup and Axcella Health
Can any of the company-specific risk be diversified away by investing in both Citigroup and Axcella Health 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 Axcella Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Axcella Health, you can compare the effects of market volatilities on Citigroup and Axcella Health 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 Axcella Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Axcella Health.
Diversification Opportunities for Citigroup and Axcella Health
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Axcella is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Axcella Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcella Health 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 Axcella Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcella Health has no effect on the direction of Citigroup i.e., Citigroup and Axcella Health go up and down completely randomly.
Pair Corralation between Citigroup and Axcella Health
If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Citigroup vs. Axcella Health
Performance |
| Timeline |
| Citigroup |
| Axcella Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Axcella Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Axcella Health
The main advantage of trading using opposite Citigroup and Axcella Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Axcella Health 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 Axcella Health will offset losses from the drop in Axcella Health's long position.The idea behind Citigroup and Axcella Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Axcella Health vs. Cyclerion Therapeutics | Axcella Health vs. Kezar Life Sciences | Axcella Health vs. CytomX Therapeutics | Axcella Health vs. Assembly Biosciences |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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