Correlation Between Citigroup and Ballard Power
Can any of the company-specific risk be diversified away by investing in both Citigroup and Ballard Power 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 Ballard Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Ballard Power Systems, you can compare the effects of market volatilities on Citigroup and Ballard Power 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 Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Ballard Power.
Diversification Opportunities for Citigroup and Ballard Power
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Ballard is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ballard Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballard Power 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 Ballard Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballard Power Systems has no effect on the direction of Citigroup i.e., Citigroup and Ballard Power go up and down completely randomly.
Pair Corralation between Citigroup and Ballard Power
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.5 times more return on investment than Ballard Power. However, Citigroup is 2.0 times less risky than Ballard Power. It trades about -0.02 of its potential returns per unit of risk. Ballard Power Systems is currently generating about -0.03 per unit of risk. If you would invest 8,051 in Citigroup on November 27, 2024 and sell it today you would lose (86.00) from holding Citigroup or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Ballard Power Systems
Performance |
| Timeline |
| Citigroup |
| Ballard Power Systems |
Citigroup and Ballard Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Ballard Power
The main advantage of trading using opposite Citigroup and Ballard Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Ballard Power 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 Ballard Power will offset losses from the drop in Ballard Power'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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