Correlation Between Citigroup and JD Food
Can any of the company-specific risk be diversified away by investing in both Citigroup and JD Food 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 JD Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and JD Food PCL, you can compare the effects of market volatilities on Citigroup and JD Food 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 JD Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and JD Food.
Diversification Opportunities for Citigroup and JD Food
Excellent diversification
The 3 months correlation between Citigroup and JDF is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and JD Food PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Food PCL 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 JD Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Food PCL has no effect on the direction of Citigroup i.e., Citigroup and JD Food go up and down completely randomly.
Pair Corralation between Citigroup and JD Food
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.06 times more return on investment than JD Food. However, Citigroup is 1.06 times more volatile than JD Food PCL. It trades about 0.21 of its potential returns per unit of risk. JD Food PCL is currently generating about 0.03 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 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 Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. JD Food PCL
Performance |
| Timeline |
| Citigroup |
| JD Food PCL |
Citigroup and JD Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and JD Food
The main advantage of trading using opposite Citigroup and JD Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, JD Food 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 JD Food will offset losses from the drop in JD Food's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| JD Food vs. Carabao Group Public | JD Food vs. Jay Mart Public | JD Food vs. Gulf Energy Development | JD Food vs. KCE Electronics Public |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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