Correlation Between Citigroup and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Citigroup and Telefonaktiebolaget 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 Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Citigroup and Telefonaktiebolaget 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 Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Telefonaktiebolaget.
Diversification Opportunities for Citigroup and Telefonaktiebolaget
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Telefonaktiebolaget is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget 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 Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of Citigroup i.e., Citigroup and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Citigroup and Telefonaktiebolaget
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times more return on investment than Telefonaktiebolaget. However, Citigroup is 1.37 times more volatile than Telefonaktiebolaget LM Ericsson. It trades about 0.21 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about -0.09 per unit of risk. If you would invest 6,255 in Citigroup on August 24, 2024 and sell it today you would earn a total of 640.00 from holding Citigroup or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Citigroup vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Citigroup |
| Telefonaktiebolaget |
Citigroup and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Telefonaktiebolaget
The main advantage of trading using opposite Citigroup and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Telefonaktiebolaget vs. Hospital Mater Dei | Telefonaktiebolaget vs. Uber Technologies | Telefonaktiebolaget vs. Verizon Communications | Telefonaktiebolaget vs. Beyond Meat |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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