Correlation Between Citigroup and Coca-Cola European
Can any of the company-specific risk be diversified away by investing in both Citigroup and Coca-Cola European 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 Coca-Cola European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Coca Cola European Partners, you can compare the effects of market volatilities on Citigroup and Coca-Cola European 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 Coca-Cola European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Coca-Cola European.
Diversification Opportunities for Citigroup and Coca-Cola European
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Coca-Cola is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European 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 Coca-Cola European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola European has no effect on the direction of Citigroup i.e., Citigroup and Coca-Cola European go up and down completely randomly.
Pair Corralation between Citigroup and Coca-Cola European
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.91 times more return on investment than Coca-Cola European. However, Citigroup is 1.1 times less risky than Coca-Cola European. It trades about 0.32 of its potential returns per unit of risk. Coca Cola European Partners is currently generating about 0.16 per unit of risk. If you would invest 6,235 in Citigroup on September 5, 2024 and sell it today you would earn a total of 915.00 from holding Citigroup or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Coca Cola European Partners
Performance |
| Timeline |
| Citigroup |
| Coca Cola European |
Citigroup and Coca-Cola European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Coca-Cola European
The main advantage of trading using opposite Citigroup and Coca-Cola European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Coca-Cola European 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 Coca-Cola European will offset losses from the drop in Coca-Cola European's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Coca-Cola European vs. PepsiCo | Coca-Cola European vs. COCA A HBC | Coca-Cola European vs. National Beverage Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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