Correlation Between Citigroup and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Citigroup and Elkem ASA 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 Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Elkem ASA, you can compare the effects of market volatilities on Citigroup and Elkem ASA 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 Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Elkem ASA.
Diversification Opportunities for Citigroup and Elkem ASA
Good diversification
The 3 months correlation between Citigroup and Elkem is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA 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 Elkem ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkem ASA has no effect on the direction of Citigroup i.e., Citigroup and Elkem ASA go up and down completely randomly.
Pair Corralation between Citigroup and Elkem ASA
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.64 times less return on investment than Elkem ASA. But when comparing it to its historical volatility, Citigroup is 2.67 times less risky than Elkem ASA. It trades about 0.41 of its potential returns per unit of risk. Elkem ASA is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,749 in Elkem ASA on November 3, 2024 and sell it today you would earn a total of 483.00 from holding Elkem ASA or generate 27.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Elkem ASA
Performance |
| Timeline |
| Citigroup |
| Elkem ASA |
Citigroup and Elkem ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Elkem ASA
The main advantage of trading using opposite Citigroup and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Elkem ASA 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 Elkem ASA will offset losses from the drop in Elkem ASA's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB ASA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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