Correlation Between Citigroup and Boyd Watterson
Can any of the company-specific risk be diversified away by investing in both Citigroup and Boyd Watterson 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 Boyd Watterson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Boyd Watterson Limited, you can compare the effects of market volatilities on Citigroup and Boyd Watterson 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 Boyd Watterson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Boyd Watterson.
Diversification Opportunities for Citigroup and Boyd Watterson
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Boyd is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Boyd Watterson Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Watterson 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 Boyd Watterson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Watterson has no effect on the direction of Citigroup i.e., Citigroup and Boyd Watterson go up and down completely randomly.
Pair Corralation between Citigroup and Boyd Watterson
Taking into account the 90-day investment horizon Citigroup is expected to generate 16.99 times more return on investment than Boyd Watterson. However, Citigroup is 16.99 times more volatile than Boyd Watterson Limited. It trades about 0.45 of its potential returns per unit of risk. Boyd Watterson Limited is currently generating about 0.25 per unit of risk. If you would invest 6,842 in Citigroup on October 20, 2024 and sell it today you would earn a total of 1,157 from holding Citigroup or generate 16.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Boyd Watterson Limited
Performance |
| Timeline |
| Citigroup |
| Boyd Watterson |
Citigroup and Boyd Watterson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Boyd Watterson
The main advantage of trading using opposite Citigroup and Boyd Watterson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Boyd Watterson 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 Boyd Watterson will offset losses from the drop in Boyd Watterson's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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