Correlation Between Citigroup and Great Wall
Can any of the company-specific risk be diversified away by investing in both Citigroup and Great Wall 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 Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Great Wall Motor, you can compare the effects of market volatilities on Citigroup and Great Wall 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 Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Great Wall.
Diversification Opportunities for Citigroup and Great Wall
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Great is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Great Wall Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Motor 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 Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Motor has no effect on the direction of Citigroup i.e., Citigroup and Great Wall go up and down completely randomly.
Pair Corralation between Citigroup and Great Wall
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.48 times less return on investment than Great Wall. But when comparing it to its historical volatility, Citigroup is 2.3 times less risky than Great Wall. It trades about 0.08 of its potential returns per unit of risk. Great Wall Motor is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,041 in Great Wall Motor on August 31, 2024 and sell it today you would earn a total of 604.00 from holding Great Wall Motor or generate 58.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.58% |
| Values | Daily Returns |
Citigroup vs. Great Wall Motor
Performance |
| Timeline |
| Citigroup |
| Great Wall Motor |
Citigroup and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Great Wall
The main advantage of trading using opposite Citigroup and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Great Wall vs. Mullen Automotive | Great Wall vs. Tesla Inc | Great Wall vs. Ford Motor | Great Wall vs. Nio Class A |
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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