Correlation Between Citigroup and Cepton
Can any of the company-specific risk be diversified away by investing in both Citigroup and Cepton 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 Cepton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Cepton Inc, you can compare the effects of market volatilities on Citigroup and Cepton 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 Cepton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Cepton.
Diversification Opportunities for Citigroup and Cepton
Weak diversification
The 3 months correlation between Citigroup and Cepton is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cepton Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cepton Inc 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 Cepton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cepton Inc has no effect on the direction of Citigroup i.e., Citigroup and Cepton go up and down completely randomly.
Pair Corralation between Citigroup and Cepton
Taking into account the 90-day investment horizon Citigroup is expected to generate 7.14 times less return on investment than Cepton. But when comparing it to its historical volatility, Citigroup is 10.91 times less risky than Cepton. It trades about 0.08 of its potential returns per unit of risk. Cepton Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.88 in Cepton Inc on September 1, 2024 and sell it today you would lose (2.98) from holding Cepton Inc or give up 76.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.8% |
| Values | Daily Returns |
Citigroup vs. Cepton Inc
Performance |
| Timeline |
| Citigroup |
| Cepton Inc |
Citigroup and Cepton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Cepton
The main advantage of trading using opposite Citigroup and Cepton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Cepton 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 Cepton will offset losses from the drop in Cepton's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Cepton vs. Cepton Inc | Cepton vs. Thayer Ventures Acquisition | Cepton vs. Anghami Warrants | Cepton vs. Inspirato |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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