Correlation Between Citigroup and ALD SA
Can any of the company-specific risk be diversified away by investing in both Citigroup and ALD SA 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 ALD SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and ALD SA, you can compare the effects of market volatilities on Citigroup and ALD SA 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 ALD SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ALD SA.
Diversification Opportunities for Citigroup and ALD SA
Modest diversification
The 3 months correlation between Citigroup and ALD is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ALD SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALD SA 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 ALD SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALD SA has no effect on the direction of Citigroup i.e., Citigroup and ALD SA go up and down completely randomly.
Pair Corralation between Citigroup and ALD SA
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.24 times less return on investment than ALD SA. But when comparing it to its historical volatility, Citigroup is 1.58 times less risky than ALD SA. It trades about 0.1 of its potential returns per unit of risk. ALD SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 647.00 in ALD SA on October 10, 2024 and sell it today you would earn a total of 37.00 from holding ALD SA or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. ALD SA
Performance |
| Timeline |
| Citigroup |
| ALD SA |
Citigroup and ALD SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and ALD SA
The main advantage of trading using opposite Citigroup and ALD SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, ALD SA 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 ALD SA will offset losses from the drop in ALD SA's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| ALD SA vs. Exail Technologies SA | ALD SA vs. X Fab Silicon | ALD SA vs. Jacquet Metal Service | ALD SA vs. Plant Advanced Technologies |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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