Correlation Between Citigroup and Japan Airport
Can any of the company-specific risk be diversified away by investing in both Citigroup and Japan Airport 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 Japan Airport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Japan Airport Terminal, you can compare the effects of market volatilities on Citigroup and Japan Airport 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 Japan Airport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Japan Airport.
Diversification Opportunities for Citigroup and Japan Airport
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Japan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Japan Airport Terminal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Airport Terminal 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 Japan Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Airport Terminal has no effect on the direction of Citigroup i.e., Citigroup and Japan Airport go up and down completely randomly.
Pair Corralation between Citigroup and Japan Airport
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.72 times more return on investment than Japan Airport. However, Citigroup is 1.38 times less risky than Japan Airport. It trades about 0.07 of its potential returns per unit of risk. Japan Airport Terminal is currently generating about 0.0 per unit of risk. If you would invest 4,206 in Citigroup on August 25, 2024 and sell it today you would earn a total of 2,778 from holding Citigroup or generate 66.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Citigroup vs. Japan Airport Terminal
Performance |
| Timeline |
| Citigroup |
| Japan Airport Terminal |
Citigroup and Japan Airport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Japan Airport
The main advantage of trading using opposite Citigroup and Japan Airport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Japan Airport 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 Japan Airport will offset losses from the drop in Japan Airport's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Canadian Imperial Bank |
| Japan Airport vs. Aeroports de Paris | Japan Airport vs. Aena SME SA | Japan Airport vs. Auckland International Airport | Japan Airport vs. Auckland International Airport |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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