Correlation Between Citigroup and Hanover Foods
Can any of the company-specific risk be diversified away by investing in both Citigroup and Hanover Foods 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 Hanover Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Hanover Foods, you can compare the effects of market volatilities on Citigroup and Hanover Foods 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 Hanover Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hanover Foods.
Diversification Opportunities for Citigroup and Hanover Foods
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Hanover is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hanover Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Foods 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 Hanover Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Foods has no effect on the direction of Citigroup i.e., Citigroup and Hanover Foods go up and down completely randomly.
Pair Corralation between Citigroup and Hanover Foods
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.31 times more return on investment than Hanover Foods. However, Citigroup is 1.31 times more volatile than Hanover Foods. It trades about 0.27 of its potential returns per unit of risk. Hanover Foods is currently generating about 0.23 per unit of risk. If you would invest 6,315 in Citigroup on September 2, 2024 and sell it today you would earn a total of 772.00 from holding Citigroup or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Hanover Foods
Performance |
| Timeline |
| Citigroup |
| Hanover Foods |
Citigroup and Hanover Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Hanover Foods
The main advantage of trading using opposite Citigroup and Hanover Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hanover Foods 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 Hanover Foods will offset losses from the drop in Hanover Foods' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Hanover Foods vs. Signet International Holdings | Hanover Foods vs. National Beverage Corp | Hanover Foods vs. PT Astra International | Hanover Foods vs. Vita Coco |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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