Correlation Between Citigroup and Weed
Can any of the company-specific risk be diversified away by investing in both Citigroup and Weed 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 Weed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Weed Inc, you can compare the effects of market volatilities on Citigroup and Weed 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 Weed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Weed.
Diversification Opportunities for Citigroup and Weed
Excellent diversification
The 3 months correlation between Citigroup and Weed is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Weed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weed Inc 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 Weed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weed Inc has no effect on the direction of Citigroup i.e., Citigroup and Weed go up and down completely randomly.
Pair Corralation between Citigroup and Weed
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.55 times less return on investment than Weed. But when comparing it to its historical volatility, Citigroup is 5.71 times less risky than Weed. It trades about 0.08 of its potential returns per unit of risk. Weed Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7.96 in Weed Inc on September 2, 2024 and sell it today you would lose (3.96) from holding Weed Inc or give up 49.75% 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. Weed Inc
Performance |
| Timeline |
| Citigroup |
| Weed Inc |
Citigroup and Weed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Weed
The main advantage of trading using opposite Citigroup and Weed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Weed 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 Weed will offset losses from the drop in Weed's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Weed vs. FutureWorld Corp | Weed vs. Journey Medical Corp | Weed vs. OrganiGram Holdings | Weed vs. Cresco Labs |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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