Correlation Between Citigroup and Cactus Acquisition
Can any of the company-specific risk be diversified away by investing in both Citigroup and Cactus Acquisition 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 Cactus Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Cactus Acquisition Corp, you can compare the effects of market volatilities on Citigroup and Cactus Acquisition 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 Cactus Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Cactus Acquisition.
Diversification Opportunities for Citigroup and Cactus Acquisition
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Cactus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cactus Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Acquisition Corp 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 Cactus Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Acquisition Corp has no effect on the direction of Citigroup i.e., Citigroup and Cactus Acquisition go up and down completely randomly.
Pair Corralation between Citigroup and Cactus Acquisition
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.04 times more return on investment than Cactus Acquisition. However, Citigroup is 1.04 times more volatile than Cactus Acquisition Corp. It trades about 0.07 of its potential returns per unit of risk. Cactus Acquisition Corp is currently generating about 0.01 per unit of risk. If you would invest 6,079 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,008 from holding Citigroup or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Cactus Acquisition Corp
Performance |
| Timeline |
| Citigroup |
| Cactus Acquisition Corp |
Citigroup and Cactus Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Cactus Acquisition
The main advantage of trading using opposite Citigroup and Cactus Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Cactus Acquisition 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 Cactus Acquisition will offset losses from the drop in Cactus Acquisition's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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