Correlation Between Citigroup and Delek Automotive
Can any of the company-specific risk be diversified away by investing in both Citigroup and Delek Automotive 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 Delek Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Delek Automotive Systems, you can compare the effects of market volatilities on Citigroup and Delek Automotive 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 Delek Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Delek Automotive.
Diversification Opportunities for Citigroup and Delek Automotive
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Delek is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Delek Automotive Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Automotive Systems 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 Delek Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Automotive Systems has no effect on the direction of Citigroup i.e., Citigroup and Delek Automotive go up and down completely randomly.
Pair Corralation between Citigroup and Delek Automotive
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.13 times less return on investment than Delek Automotive. But when comparing it to its historical volatility, Citigroup is 1.06 times less risky than Delek Automotive. It trades about 0.26 of its potential returns per unit of risk. Delek Automotive Systems is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 231,200 in Delek Automotive Systems on September 1, 2024 and sell it today you would earn a total of 25,400 from holding Delek Automotive Systems or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.71% |
| Values | Daily Returns |
Citigroup vs. Delek Automotive Systems
Performance |
| Timeline |
| Citigroup |
| Delek Automotive Systems |
Citigroup and Delek Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Delek Automotive
The main advantage of trading using opposite Citigroup and Delek Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Delek Automotive 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 Delek Automotive will offset losses from the drop in Delek Automotive's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Delek Automotive vs. El Al Israel | Delek Automotive vs. Magic Software Enterprises | Delek Automotive vs. Neto Malinda | Delek Automotive vs. Orbit Technologies |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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