Correlation Between Citigroup and Cencora
Can any of the company-specific risk be diversified away by investing in both Citigroup and Cencora 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 Cencora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Cencora, you can compare the effects of market volatilities on Citigroup and Cencora 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 Cencora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Cencora.
Diversification Opportunities for Citigroup and Cencora
Very weak diversification
The 3 months correlation between Citigroup and Cencora is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora 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 Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of Citigroup i.e., Citigroup and Cencora go up and down completely randomly.
Pair Corralation between Citigroup and Cencora
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.48 times more return on investment than Cencora. However, Citigroup is 1.48 times more volatile than Cencora. It trades about 0.08 of its potential returns per unit of risk. Cencora is currently generating about 0.1 per unit of risk. If you would invest 4,525 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,562 from holding Citigroup or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Cencora
Performance |
| Timeline |
| Citigroup |
| Cencora |
Citigroup and Cencora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Cencora
The main advantage of trading using opposite Citigroup and Cencora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Cencora 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 Cencora will offset losses from the drop in Cencora's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Cencora vs. Parker Hannifin | Cencora vs. Grupo Aeroportuario del | Cencora vs. Griffon | Cencora vs. Harmony Gold Mining |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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