Correlation Between Citigroup and KFA Mount
Can any of the company-specific risk be diversified away by investing in both Citigroup and KFA Mount 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 KFA Mount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and KFA Mount Lucas, you can compare the effects of market volatilities on Citigroup and KFA Mount 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 KFA Mount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and KFA Mount.
Diversification Opportunities for Citigroup and KFA Mount
Pay attention - limited upside
The 3 months correlation between Citigroup and KFA is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KFA Mount Lucas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFA Mount Lucas 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 KFA Mount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFA Mount Lucas has no effect on the direction of Citigroup i.e., Citigroup and KFA Mount go up and down completely randomly.
Pair Corralation between Citigroup and KFA Mount
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.23 times more return on investment than KFA Mount. However, Citigroup is 2.23 times more volatile than KFA Mount Lucas. It trades about 0.1 of its potential returns per unit of risk. KFA Mount Lucas is currently generating about -0.04 per unit of risk. If you would invest 4,357 in Citigroup on August 26, 2024 and sell it today you would earn a total of 2,627 from holding Citigroup or generate 60.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. KFA Mount Lucas
Performance |
| Timeline |
| Citigroup |
| KFA Mount Lucas |
Citigroup and KFA Mount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and KFA Mount
The main advantage of trading using opposite Citigroup and KFA Mount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, KFA Mount 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 KFA Mount will offset losses from the drop in KFA Mount's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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