Correlation Between Citigroup and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Citigroup and Axalta Coating 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 Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Axalta Coating Systems, you can compare the effects of market volatilities on Citigroup and Axalta Coating 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 Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Axalta Coating.
Diversification Opportunities for Citigroup and Axalta Coating
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Axalta is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems 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 Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Citigroup i.e., Citigroup and Axalta Coating go up and down completely randomly.
Pair Corralation between Citigroup and Axalta Coating
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.39 times less return on investment than Axalta Coating. But when comparing it to its historical volatility, Citigroup is 1.06 times less risky than Axalta Coating. It trades about 0.25 of its potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,559 in Axalta Coating Systems on August 27, 2024 and sell it today you would earn a total of 570.00 from holding Axalta Coating Systems or generate 16.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Axalta Coating Systems
Performance |
| Timeline |
| Citigroup |
| Axalta Coating Systems |
Citigroup and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Axalta Coating
The main advantage of trading using opposite Citigroup and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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