Correlation Between Citigroup and Frontline
Can any of the company-specific risk be diversified away by investing in both Citigroup and Frontline 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 Frontline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Frontline, you can compare the effects of market volatilities on Citigroup and Frontline 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 Frontline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Frontline.
Diversification Opportunities for Citigroup and Frontline
Excellent diversification
The 3 months correlation between Citigroup and Frontline is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline 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 Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Citigroup i.e., Citigroup and Frontline go up and down completely randomly.
Pair Corralation between Citigroup and Frontline
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.67 times more return on investment than Frontline. However, Citigroup is 1.48 times less risky than Frontline. It trades about 0.26 of its potential returns per unit of risk. Frontline is currently generating about -0.21 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Frontline
Performance |
| Timeline |
| Citigroup |
| Frontline |
Citigroup and Frontline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Frontline
The main advantage of trading using opposite Citigroup and Frontline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Frontline 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 Frontline will offset losses from the drop in Frontline's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Frontline vs. DnB ASA | Frontline vs. Mowi ASA | Frontline vs. Yara International ASA | Frontline vs. Telenor 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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