Correlation Between Citigroup and Desjardins
Can any of the company-specific risk be diversified away by investing in both Citigroup and Desjardins 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 Desjardins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Desjardins RI USA, you can compare the effects of market volatilities on Citigroup and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Desjardins.
Diversification Opportunities for Citigroup and Desjardins
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Desjardins is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Desjardins RI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI USA 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 Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI USA has no effect on the direction of Citigroup i.e., Citigroup and Desjardins go up and down completely randomly.
Pair Corralation between Citigroup and Desjardins
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.18 times more return on investment than Desjardins. However, Citigroup is 2.18 times more volatile than Desjardins RI USA. It trades about 0.09 of its potential returns per unit of risk. Desjardins RI USA is currently generating about 0.13 per unit of risk. If you would invest 6,037 in Citigroup on November 28, 2024 and sell it today you would earn a total of 1,777 from holding Citigroup or generate 29.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.92% |
| Values | Daily Returns |
Citigroup vs. Desjardins RI USA
Performance |
| Timeline |
| Citigroup |
| Desjardins RI USA |
Citigroup and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Desjardins
The main advantage of trading using opposite Citigroup and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Desjardins vs. Desjardins American Equity | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins RI Canada | Desjardins vs. Desjardins Canadian Corporate |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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