Correlation Between Citigroup and Dynagas LNG
Can any of the company-specific risk be diversified away by investing in both Citigroup and Dynagas LNG 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 Dynagas LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Dynagas LNG Partners, you can compare the effects of market volatilities on Citigroup and Dynagas LNG 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 Dynagas LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Dynagas LNG.
Diversification Opportunities for Citigroup and Dynagas LNG
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Dynagas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners 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 Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of Citigroup i.e., Citigroup and Dynagas LNG go up and down completely randomly.
Pair Corralation between Citigroup and Dynagas LNG
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.28 times less return on investment than Dynagas LNG. But when comparing it to its historical volatility, Citigroup is 1.33 times less risky than Dynagas LNG. It trades about 0.23 of its potential returns per unit of risk. Dynagas LNG Partners is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 390.00 in Dynagas LNG Partners on August 24, 2024 and sell it today you would earn a total of 58.00 from holding Dynagas LNG Partners or generate 14.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Dynagas LNG Partners
Performance |
| Timeline |
| Citigroup |
| Dynagas LNG Partners |
Citigroup and Dynagas LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Dynagas LNG
The main advantage of trading using opposite Citigroup and Dynagas LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Dynagas LNG 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 Dynagas LNG will offset losses from the drop in Dynagas LNG's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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