Correlation Between Citigroup and Intact Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and Intact Financial 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 Intact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Intact Financial Corp, you can compare the effects of market volatilities on Citigroup and Intact Financial 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 Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Intact Financial.
Diversification Opportunities for Citigroup and Intact Financial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Intact is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Intact Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial Corp 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial Corp has no effect on the direction of Citigroup i.e., Citigroup and Intact Financial go up and down completely randomly.
Pair Corralation between Citigroup and Intact Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.53 times more return on investment than Intact Financial. However, Citigroup is 3.53 times more volatile than Intact Financial Corp. It trades about 0.21 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.12 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 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Intact Financial Corp
Performance |
| Timeline |
| Citigroup |
| Intact Financial Corp |
Citigroup and Intact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Intact Financial
The main advantage of trading using opposite Citigroup and Intact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Intact Financial 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 Intact Financial will offset losses from the drop in Intact Financial's long position.The idea behind Citigroup and Intact Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Intact Financial vs. Intact Financial Corp | Intact Financial vs. National Bank of | Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. Fairfax Financial 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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