Correlation Between Citigroup and CPI Aerostructures
Can any of the company-specific risk be diversified away by investing in both Citigroup and CPI Aerostructures 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 CPI Aerostructures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CPI Aerostructures, you can compare the effects of market volatilities on Citigroup and CPI Aerostructures 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 CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CPI Aerostructures.
Diversification Opportunities for Citigroup and CPI Aerostructures
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and CPI is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures 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 CPI Aerostructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Aerostructures has no effect on the direction of Citigroup i.e., Citigroup and CPI Aerostructures go up and down completely randomly.
Pair Corralation between Citigroup and CPI Aerostructures
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.52 times more return on investment than CPI Aerostructures. However, Citigroup is 1.91 times less risky than CPI Aerostructures. It trades about 0.06 of its potential returns per unit of risk. CPI Aerostructures is currently generating about 0.01 per unit of risk. If you would invest 4,733 in Citigroup on August 27, 2024 and sell it today you would earn a total of 2,251 from holding Citigroup or generate 47.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. CPI Aerostructures
Performance |
| Timeline |
| Citigroup |
| CPI Aerostructures |
Citigroup and CPI Aerostructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CPI Aerostructures
The main advantage of trading using opposite Citigroup and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CPI Aerostructures 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 CPI Aerostructures will offset losses from the drop in CPI Aerostructures' long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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