Correlation Between Citigroup and Capital Power
Can any of the company-specific risk be diversified away by investing in both Citigroup and Capital Power 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 Capital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Capital Power, you can compare the effects of market volatilities on Citigroup and Capital Power 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 Capital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Capital Power.
Diversification Opportunities for Citigroup and Capital Power
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Capital is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Capital Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Power 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 Capital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Power has no effect on the direction of Citigroup i.e., Citigroup and Capital Power go up and down completely randomly.
Pair Corralation between Citigroup and Capital Power
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.08 times more return on investment than Capital Power. However, Citigroup is 1.08 times more volatile than Capital Power. It trades about 0.4 of its potential returns per unit of risk. Capital Power is currently generating about -0.03 per unit of risk. If you would invest 6,977 in Citigroup on October 22, 2024 and sell it today you would earn a total of 1,022 from holding Citigroup or generate 14.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Citigroup vs. Capital Power
Performance |
| Timeline |
| Citigroup |
| Capital Power |
Citigroup and Capital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Capital Power
The main advantage of trading using opposite Citigroup and Capital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Capital Power 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 Capital Power will offset losses from the drop in Capital Power's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Capital Power vs. Canadian Utilities Limited | Capital Power vs. Emera Inc | Capital Power vs. Keyera Corp | Capital Power vs. Northland Power |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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