Correlation Between Citigroup and Boston Pizza
Can any of the company-specific risk be diversified away by investing in both Citigroup and Boston Pizza 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 Boston Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Boston Pizza Royalties, you can compare the effects of market volatilities on Citigroup and Boston Pizza 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 Boston Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Boston Pizza.
Diversification Opportunities for Citigroup and Boston Pizza
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Boston is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Boston Pizza Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Pizza Royalties 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 Boston Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Pizza Royalties has no effect on the direction of Citigroup i.e., Citigroup and Boston Pizza go up and down completely randomly.
Pair Corralation between Citigroup and Boston Pizza
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.49 times more return on investment than Boston Pizza. However, Citigroup is 2.49 times more volatile than Boston Pizza Royalties. It trades about 0.21 of its potential returns per unit of risk. Boston Pizza Royalties is currently generating about -0.17 per unit of risk. 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Boston Pizza Royalties
Performance |
| Timeline |
| Citigroup |
| Boston Pizza Royalties |
Citigroup and Boston Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Boston Pizza
The main advantage of trading using opposite Citigroup and Boston Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Boston Pizza 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 Boston Pizza will offset losses from the drop in Boston Pizza's long position.The idea behind Citigroup and Boston Pizza Royalties 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.| Boston Pizza vs. Apple Inc CDR | Boston Pizza vs. Berkshire Hathaway CDR | Boston Pizza vs. Microsoft Corp CDR | Boston Pizza vs. Alphabet Inc CDR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |