Correlation Between Citigroup and Laser Photonics
Can any of the company-specific risk be diversified away by investing in both Citigroup and Laser Photonics 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 Laser Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Laser Photonics, you can compare the effects of market volatilities on Citigroup and Laser Photonics 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 Laser Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Laser Photonics.
Diversification Opportunities for Citigroup and Laser Photonics
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Laser is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Laser Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laser Photonics 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 Laser Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laser Photonics has no effect on the direction of Citigroup i.e., Citigroup and Laser Photonics go up and down completely randomly.
Pair Corralation between Citigroup and Laser Photonics
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.24 times less return on investment than Laser Photonics. But when comparing it to its historical volatility, Citigroup is 7.49 times less risky than Laser Photonics. It trades about 0.08 of its potential returns per unit of risk. Laser Photonics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 388.00 in Laser Photonics on August 31, 2024 and sell it today you would earn a total of 171.00 from holding Laser Photonics or generate 44.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Laser Photonics
Performance |
| Timeline |
| Citigroup |
| Laser Photonics |
Citigroup and Laser Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Laser Photonics
The main advantage of trading using opposite Citigroup and Laser Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Laser Photonics 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 Laser Photonics will offset losses from the drop in Laser Photonics' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Laser Photonics vs. Nuburu Inc | Laser Photonics vs. JE Cleantech Holdings | Laser Photonics vs. Reelcause | Laser Photonics vs. Shapeways Holdings, Common |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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