Correlation Between Citigroup and Itron
Can any of the company-specific risk be diversified away by investing in both Citigroup and Itron 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 Itron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Itron Inc, you can compare the effects of market volatilities on Citigroup and Itron 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 Itron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Itron.
Diversification Opportunities for Citigroup and Itron
Poor diversification
The 3 months correlation between Citigroup and Itron is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Itron Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itron Inc 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 Itron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itron Inc has no effect on the direction of Citigroup i.e., Citigroup and Itron go up and down completely randomly.
Pair Corralation between Citigroup and Itron
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times less return on investment than Itron. In addition to that, Citigroup is 1.04 times more volatile than Itron Inc. It trades about 0.12 of its total potential returns per unit of risk. Itron Inc is currently generating about 0.17 per unit of volatility. If you would invest 9,777 in Itron Inc on August 31, 2024 and sell it today you would earn a total of 2,152 from holding Itron Inc or generate 22.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Itron Inc
Performance |
| Timeline |
| Citigroup |
| Itron Inc |
Citigroup and Itron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Itron
The main advantage of trading using opposite Citigroup and Itron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Itron 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 Itron will offset losses from the drop in Itron'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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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