Correlation Between Citigroup and Dr Foods
Can any of the company-specific risk be diversified away by investing in both Citigroup and Dr Foods 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 Dr Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Dr Foods, you can compare the effects of market volatilities on Citigroup and Dr Foods 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 Dr Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Dr Foods.
Diversification Opportunities for Citigroup and Dr Foods
Very good diversification
The 3 months correlation between Citigroup and DRFS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Dr Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Foods 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 Dr Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Foods has no effect on the direction of Citigroup i.e., Citigroup and Dr Foods go up and down completely randomly.
Pair Corralation between Citigroup and Dr Foods
Taking into account the 90-day investment horizon Citigroup is expected to generate 4.72 times less return on investment than Dr Foods. But when comparing it to its historical volatility, Citigroup is 9.19 times less risky than Dr Foods. It trades about 0.15 of its potential returns per unit of risk. Dr Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4.35 in Dr Foods on August 30, 2024 and sell it today you would lose (0.35) from holding Dr Foods or give up 8.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Dr Foods
Performance |
| Timeline |
| Citigroup |
| Dr Foods |
Citigroup and Dr Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Dr Foods
The main advantage of trading using opposite Citigroup and Dr Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Dr Foods 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 Dr Foods will offset losses from the drop in Dr Foods' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Dr Foods vs. Seychelle Environmtl | Dr Foods vs. Vow ASA | Dr Foods vs. Eestech | Dr Foods vs. One World Universe |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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