Correlation Between Citigroup and GSD Holding
Can any of the company-specific risk be diversified away by investing in both Citigroup and GSD Holding 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 GSD Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and GSD Holding AS, you can compare the effects of market volatilities on Citigroup and GSD Holding 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 GSD Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and GSD Holding.
Diversification Opportunities for Citigroup and GSD Holding
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and GSD is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and GSD Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSD Holding AS 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 GSD Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSD Holding AS has no effect on the direction of Citigroup i.e., Citigroup and GSD Holding go up and down completely randomly.
Pair Corralation between Citigroup and GSD Holding
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.7 times more return on investment than GSD Holding. However, Citigroup is 1.7 times more volatile than GSD Holding AS. It trades about 0.33 of its potential returns per unit of risk. GSD Holding AS is currently generating about 0.52 per unit of risk. If you would invest 6,235 in Citigroup on September 4, 2024 and sell it today you would earn a total of 904.00 from holding Citigroup or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. GSD Holding AS
Performance |
| Timeline |
| Citigroup |
| GSD Holding AS |
Citigroup and GSD Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and GSD Holding
The main advantage of trading using opposite Citigroup and GSD Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, GSD Holding 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 GSD Holding will offset losses from the drop in GSD Holding's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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