Correlation Between Citigroup and Commercial Metals
Can any of the company-specific risk be diversified away by investing in both Citigroup and Commercial Metals 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 Commercial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Commercial Metals, you can compare the effects of market volatilities on Citigroup and Commercial Metals 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 Commercial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Commercial Metals.
Diversification Opportunities for Citigroup and Commercial Metals
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Commercial is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals 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 Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Citigroup i.e., Citigroup and Commercial Metals go up and down completely randomly.
Pair Corralation between Citigroup and Commercial Metals
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.85 times more return on investment than Commercial Metals. However, Citigroup is 1.17 times less risky than Commercial Metals. It trades about 0.06 of its potential returns per unit of risk. Commercial Metals is currently generating about 0.04 per unit of risk. If you would invest 6,131 in Citigroup on August 24, 2024 and sell it today you would earn a total of 764.00 from holding Citigroup or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Commercial Metals
Performance |
| Timeline |
| Citigroup |
| Commercial Metals |
Citigroup and Commercial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Commercial Metals
The main advantage of trading using opposite Citigroup and Commercial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Commercial Metals 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 Commercial Metals will offset losses from the drop in Commercial Metals' long position.| Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co |
| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals vs. Universal Stainless Alloy |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |