Correlation Between Citigroup and Hanza AB
Can any of the company-specific risk be diversified away by investing in both Citigroup and Hanza AB 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 Hanza AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Hanza AB, you can compare the effects of market volatilities on Citigroup and Hanza AB 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 Hanza AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hanza AB.
Diversification Opportunities for Citigroup and Hanza AB
Very weak diversification
The 3 months correlation between Citigroup and Hanza is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hanza AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanza AB 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 Hanza AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanza AB has no effect on the direction of Citigroup i.e., Citigroup and Hanza AB go up and down completely randomly.
Pair Corralation between Citigroup and Hanza AB
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.66 times more return on investment than Hanza AB. However, Citigroup is 1.51 times less risky than Hanza AB. It trades about 0.07 of its potential returns per unit of risk. Hanza AB is currently generating about 0.04 per unit of risk. If you would invest 4,206 in Citigroup on August 25, 2024 and sell it today you would earn a total of 2,778 from holding Citigroup or generate 66.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Citigroup vs. Hanza AB
Performance |
| Timeline |
| Citigroup |
| Hanza AB |
Citigroup and Hanza AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Hanza AB
The main advantage of trading using opposite Citigroup and Hanza AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hanza AB 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 Hanza AB will offset losses from the drop in Hanza AB's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Hanza AB vs. Divio Technologies AB | Hanza AB vs. XMReality AB | Hanza AB vs. KABE Group AB | Hanza AB vs. IAR Systems Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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