Correlation Between Citigroup and Hashicorp
Can any of the company-specific risk be diversified away by investing in both Citigroup and Hashicorp 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 Hashicorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Hashicorp, you can compare the effects of market volatilities on Citigroup and Hashicorp 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 Hashicorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hashicorp.
Diversification Opportunities for Citigroup and Hashicorp
Modest diversification
The 3 months correlation between Citigroup and Hashicorp is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hashicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hashicorp 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 Hashicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hashicorp has no effect on the direction of Citigroup i.e., Citigroup and Hashicorp go up and down completely randomly.
Pair Corralation between Citigroup and Hashicorp
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.51 times more return on investment than Hashicorp. However, Citigroup is 1.98 times less risky than Hashicorp. It trades about 0.07 of its potential returns per unit of risk. Hashicorp is currently generating about 0.03 per unit of risk. If you would invest 4,206 in Citigroup on August 24, 2024 and sell it today you would earn a total of 2,689 from holding Citigroup or generate 63.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Hashicorp
Performance |
| Timeline |
| Citigroup |
| Hashicorp |
Citigroup and Hashicorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Hashicorp
The main advantage of trading using opposite Citigroup and Hashicorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hashicorp 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 Hashicorp will offset losses from the drop in Hashicorp's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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