Correlation Between Citigroup and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Citigroup and Fast Retailing 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 Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Fast Retailing Co, you can compare the effects of market volatilities on Citigroup and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Fast Retailing.
Diversification Opportunities for Citigroup and Fast Retailing
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Fast is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Citigroup i.e., Citigroup and Fast Retailing go up and down completely randomly.
Pair Corralation between Citigroup and Fast Retailing
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.95 times more return on investment than Fast Retailing. However, Citigroup is 1.05 times less risky than Fast Retailing. It trades about 0.07 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.06 per unit of risk. If you would invest 4,118 in Citigroup on August 29, 2024 and sell it today you would earn a total of 2,857 from holding Citigroup or generate 69.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
Citigroup vs. Fast Retailing Co
Performance |
| Timeline |
| Citigroup |
| Fast Retailing |
Citigroup and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Fast Retailing
The main advantage of trading using opposite Citigroup and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Superior Plus Corp | Fast Retailing vs. SIVERS SEMICONDUCTORS AB |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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