Correlation Between Citigroup and Capgemini
Can any of the company-specific risk be diversified away by investing in both Citigroup and Capgemini 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 Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Capgemini SE, you can compare the effects of market volatilities on Citigroup and Capgemini 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 Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Capgemini.
Diversification Opportunities for Citigroup and Capgemini
Pay attention - limited upside
The 3 months correlation between Citigroup and Capgemini is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Citigroup i.e., Citigroup and Capgemini go up and down completely randomly.
Pair Corralation between Citigroup and Capgemini
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.97 times more return on investment than Capgemini. However, Citigroup is 1.03 times less risky than Capgemini. It trades about 0.08 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.01 per unit of risk. If you would invest 4,544 in Citigroup on September 1, 2024 and sell it today you would earn a total of 2,543 from holding Citigroup or generate 55.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.89% |
| Values | Daily Returns |
Citigroup vs. Capgemini SE
Performance |
| Timeline |
| Citigroup |
| Capgemini SE |
Citigroup and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Capgemini
The main advantage of trading using opposite Citigroup and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini'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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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