Correlation Between Citigroup and Clearway Energy
Can any of the company-specific risk be diversified away by investing in both Citigroup and Clearway Energy 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 Clearway Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Clearway Energy Class, you can compare the effects of market volatilities on Citigroup and Clearway Energy 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 Clearway Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Clearway Energy.
Diversification Opportunities for Citigroup and Clearway Energy
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Clearway is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Clearway Energy Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway Energy Class 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 Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy Class has no effect on the direction of Citigroup i.e., Citigroup and Clearway Energy go up and down completely randomly.
Pair Corralation between Citigroup and Clearway Energy
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.85 times more return on investment than Clearway Energy. However, Citigroup is 1.17 times less risky than Clearway Energy. It trades about 0.12 of its potential returns per unit of risk. Clearway Energy Class is currently generating about 0.05 per unit of risk. If you would invest 4,325 in Citigroup on August 24, 2024 and sell it today you would earn a total of 2,690 from holding Citigroup or generate 62.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Clearway Energy Class
Performance |
| Timeline |
| Citigroup |
| Clearway Energy Class |
Citigroup and Clearway Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Clearway Energy
The main advantage of trading using opposite Citigroup and Clearway Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Clearway Energy 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 Clearway Energy will offset losses from the drop in Clearway Energy's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Clearway Energy | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Atlantica Sustainable Infrastructure |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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