Correlation Between Citigroup and Star Diamond
Can any of the company-specific risk be diversified away by investing in both Citigroup and Star Diamond 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 Star Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Star Diamond, you can compare the effects of market volatilities on Citigroup and Star Diamond 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 Star Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Star Diamond.
Diversification Opportunities for Citigroup and Star Diamond
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Star is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Star Diamond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Diamond 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 Star Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Diamond has no effect on the direction of Citigroup i.e., Citigroup and Star Diamond go up and down completely randomly.
Pair Corralation between Citigroup and Star Diamond
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.83 times less return on investment than Star Diamond. But when comparing it to its historical volatility, Citigroup is 11.62 times less risky than Star Diamond. It trades about 0.23 of its potential returns per unit of risk. Star Diamond is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.70 in Star Diamond on August 24, 2024 and sell it today you would lose (0.65) from holding Star Diamond or give up 38.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Star Diamond
Performance |
| Timeline |
| Citigroup |
| Star Diamond |
Citigroup and Star Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Star Diamond
The main advantage of trading using opposite Citigroup and Star Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Star Diamond 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 Star Diamond will offset losses from the drop in Star Diamond's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Star Diamond vs. Evolution Mining Limited | Star Diamond vs. The Hanover Insurance | Star Diamond vs. KENEDIX OFFICE INV | Star Diamond vs. Perseus Mining Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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