Correlation Between Citigroup and Fuel Tech
Can any of the company-specific risk be diversified away by investing in both Citigroup and Fuel Tech 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 Fuel Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Fuel Tech, you can compare the effects of market volatilities on Citigroup and Fuel Tech 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 Fuel Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Fuel Tech.
Diversification Opportunities for Citigroup and Fuel Tech
Significant diversification
The 3 months correlation between Citigroup and Fuel is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Fuel Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuel Tech 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 Fuel Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuel Tech has no effect on the direction of Citigroup i.e., Citigroup and Fuel Tech go up and down completely randomly.
Pair Corralation between Citigroup and Fuel Tech
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.64 times more return on investment than Fuel Tech. However, Citigroup is 1.57 times less risky than Fuel Tech. It trades about 0.07 of its potential returns per unit of risk. Fuel Tech is currently generating about -0.02 per unit of risk. If you would invest 4,769 in Citigroup on October 20, 2024 and sell it today you would earn a total of 3,230 from holding Citigroup or generate 67.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Fuel Tech
Performance |
| Timeline |
| Citigroup |
| Fuel Tech |
Citigroup and Fuel Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Fuel Tech
The main advantage of trading using opposite Citigroup and Fuel Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Fuel Tech 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 Fuel Tech will offset losses from the drop in Fuel Tech's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
| Fuel Tech vs. Federal Signal | Fuel Tech vs. CECO Environmental Corp | Fuel Tech vs. Zurn Elkay Water | Fuel Tech vs. Greenlane Renewables |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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