Correlation Between Citigroup and Cognex
Can any of the company-specific risk be diversified away by investing in both Citigroup and Cognex 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 Cognex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Cognex, you can compare the effects of market volatilities on Citigroup and Cognex 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 Cognex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Cognex.
Diversification Opportunities for Citigroup and Cognex
Very poor diversification
The 3 months correlation between Citigroup and Cognex is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cognex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognex 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 Cognex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognex has no effect on the direction of Citigroup i.e., Citigroup and Cognex go up and down completely randomly.
Pair Corralation between Citigroup and Cognex
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.76 times more return on investment than Cognex. However, Citigroup is 1.32 times less risky than Cognex. It trades about 0.08 of its potential returns per unit of risk. Cognex is currently generating about 0.01 per unit of risk. If you would invest 6,064 in Citigroup on September 3, 2024 and sell it today you would earn a total of 1,075 from holding Citigroup or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.9% |
| Values | Daily Returns |
Citigroup vs. Cognex
Performance |
| Timeline |
| Citigroup |
| Cognex |
Citigroup and Cognex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Cognex
The main advantage of trading using opposite Citigroup and Cognex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Cognex 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 Cognex will offset losses from the drop in Cognex's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Cognex vs. HEXAGON AB ADR1 | Cognex vs. Teledyne Technologies Incorporated | Cognex vs. Trimble | Cognex vs. MKS Instruments |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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