Correlation Between Citigroup and Galectin Therapeutics
Can any of the company-specific risk be diversified away by investing in both Citigroup and Galectin Therapeutics 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 Galectin Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Galectin Therapeutics, you can compare the effects of market volatilities on Citigroup and Galectin Therapeutics 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 Galectin Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Galectin Therapeutics.
Diversification Opportunities for Citigroup and Galectin Therapeutics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Galectin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Galectin Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galectin Therapeutics 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 Galectin Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galectin Therapeutics has no effect on the direction of Citigroup i.e., Citigroup and Galectin Therapeutics go up and down completely randomly.
Pair Corralation between Citigroup and Galectin Therapeutics
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.73 times more return on investment than Galectin Therapeutics. However, Citigroup is 1.37 times less risky than Galectin Therapeutics. It trades about 0.15 of its potential returns per unit of risk. Galectin Therapeutics is currently generating about 0.04 per unit of risk. If you would invest 6,205 in Citigroup on August 30, 2024 and sell it today you would earn a total of 811.00 from holding Citigroup or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Galectin Therapeutics
Performance |
| Timeline |
| Citigroup |
| Galectin Therapeutics |
Citigroup and Galectin Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Galectin Therapeutics
The main advantage of trading using opposite Citigroup and Galectin Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Galectin Therapeutics 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 Galectin Therapeutics will offset losses from the drop in Galectin Therapeutics' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Galectin Therapeutics vs. Madrigal Pharmaceuticals | Galectin Therapeutics vs. Viking Therapeutics | Galectin Therapeutics vs. Sarepta Therapeutics | Galectin Therapeutics vs. Hepion Pharmaceuticals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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