Correlation Between Citigroup and Cyber Security
Can any of the company-specific risk be diversified away by investing in both Citigroup and Cyber Security 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 Cyber Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Cyber Security 1, you can compare the effects of market volatilities on Citigroup and Cyber Security 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 Cyber Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Cyber Security.
Diversification Opportunities for Citigroup and Cyber Security
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Cyber is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cyber Security 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyber Security 1 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 Cyber Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyber Security 1 has no effect on the direction of Citigroup i.e., Citigroup and Cyber Security go up and down completely randomly.
Pair Corralation between Citigroup and Cyber Security
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.18 times more return on investment than Cyber Security. However, Citigroup is 5.62 times less risky than Cyber Security. It trades about -0.09 of its potential returns per unit of risk. Cyber Security 1 is currently generating about -0.23 per unit of risk. If you would invest 7,075 in Citigroup on September 24, 2024 and sell it today you would lose (156.00) from holding Citigroup or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Cyber Security 1
Performance |
| Timeline |
| Citigroup |
| Cyber Security 1 |
Citigroup and Cyber Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Cyber Security
The main advantage of trading using opposite Citigroup and Cyber Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Cyber Security 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 Cyber Security will offset losses from the drop in Cyber Security's long position.The idea behind Citigroup and Cyber Security 1 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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