Correlation Between Citigroup and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Citigroup and CVW CleanTech 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 CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CVW CleanTech, you can compare the effects of market volatilities on Citigroup and CVW CleanTech 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 CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CVW CleanTech.
Diversification Opportunities for Citigroup and CVW CleanTech
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and CVW is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech 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 CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Citigroup i.e., Citigroup and CVW CleanTech go up and down completely randomly.
Pair Corralation between Citigroup and CVW CleanTech
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.73 times more return on investment than CVW CleanTech. However, Citigroup is 1.38 times less risky than CVW CleanTech. It trades about 0.45 of its potential returns per unit of risk. CVW CleanTech is currently generating about -0.05 per unit of risk. If you would invest 6,994 in Citigroup on November 2, 2024 and sell it today you would earn a total of 1,192 from holding Citigroup or generate 17.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Citigroup vs. CVW CleanTech
Performance |
| Timeline |
| Citigroup |
| CVW CleanTech |
Citigroup and CVW CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CVW CleanTech
The main advantage of trading using opposite Citigroup and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CVW CleanTech 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 CVW CleanTech will offset losses from the drop in CVW CleanTech's long position.| Citigroup vs. Royal Bank of | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Canadian Imperial Bank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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