Correlation Between Citigroup and Generic Sweden
Can any of the company-specific risk be diversified away by investing in both Citigroup and Generic Sweden 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 Generic Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Generic Sweden publ, you can compare the effects of market volatilities on Citigroup and Generic Sweden 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 Generic Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Generic Sweden.
Diversification Opportunities for Citigroup and Generic Sweden
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Generic is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ 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 Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Citigroup i.e., Citigroup and Generic Sweden go up and down completely randomly.
Pair Corralation between Citigroup and Generic Sweden
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.63 times more return on investment than Generic Sweden. However, Citigroup is 1.58 times less risky than Generic Sweden. It trades about 0.08 of its potential returns per unit of risk. Generic Sweden publ is currently generating about 0.04 per unit of risk. If you would invest 4,525 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,562 from holding Citigroup or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Citigroup vs. Generic Sweden publ
Performance |
| Timeline |
| Citigroup |
| Generic Sweden publ |
Citigroup and Generic Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Generic Sweden
The main advantage of trading using opposite Citigroup and Generic Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Generic Sweden 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 Generic Sweden will offset losses from the drop in Generic Sweden's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Generic Sweden vs. Enea AB | Generic Sweden vs. Novotek AB | Generic Sweden vs. Addnode Group AB | Generic Sweden vs. Softronic 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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