Correlation Between Citigroup and InTest
Can any of the company-specific risk be diversified away by investing in both Citigroup and InTest 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 InTest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and inTest, you can compare the effects of market volatilities on Citigroup and InTest 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 InTest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and InTest.
Diversification Opportunities for Citigroup and InTest
Poor diversification
The 3 months correlation between Citigroup and InTest is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and inTest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on inTest 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 InTest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of inTest has no effect on the direction of Citigroup i.e., Citigroup and InTest go up and down completely randomly.
Pair Corralation between Citigroup and InTest
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.03 times less return on investment than InTest. But when comparing it to its historical volatility, Citigroup is 1.59 times less risky than InTest. It trades about 0.21 of its potential returns per unit of risk. inTest is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 710.00 in inTest on August 24, 2024 and sell it today you would earn a total of 69.00 from holding inTest or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. inTest
Performance |
| Timeline |
| Citigroup |
| inTest |
Citigroup and InTest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and InTest
The main advantage of trading using opposite Citigroup and InTest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, InTest 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 InTest will offset losses from the drop in InTest's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| InTest vs. Axcelis Technologies | InTest vs. Lam Research Corp | InTest vs. Photronics | InTest vs. indie Semiconductor |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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