Correlation Between Citigroup and HEICO
Can any of the company-specific risk be diversified away by investing in both Citigroup and HEICO 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 HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and HEICO, you can compare the effects of market volatilities on Citigroup and HEICO 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 HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and HEICO.
Diversification Opportunities for Citigroup and HEICO
Very weak diversification
The 3 months correlation between Citigroup and HEICO is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO 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 HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Citigroup i.e., Citigroup and HEICO go up and down completely randomly.
Pair Corralation between Citigroup and HEICO
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.35 times more return on investment than HEICO. However, Citigroup is 1.35 times more volatile than HEICO. It trades about 0.25 of its potential returns per unit of risk. HEICO is currently generating about 0.31 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. HEICO
Performance |
| Timeline |
| Citigroup |
| HEICO |
Citigroup and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and HEICO
The main advantage of trading using opposite Citigroup and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, HEICO 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 HEICO will offset losses from the drop in HEICO's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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