Correlation Between Citigroup and LIBERTY DEFENSE
Can any of the company-specific risk be diversified away by investing in both Citigroup and LIBERTY DEFENSE 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 LIBERTY DEFENSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and LIBERTY DEFENSE H, you can compare the effects of market volatilities on Citigroup and LIBERTY DEFENSE 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 LIBERTY DEFENSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and LIBERTY DEFENSE.
Diversification Opportunities for Citigroup and LIBERTY DEFENSE
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and LIBERTY is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LIBERTY DEFENSE H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIBERTY DEFENSE H 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 LIBERTY DEFENSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIBERTY DEFENSE H has no effect on the direction of Citigroup i.e., Citigroup and LIBERTY DEFENSE go up and down completely randomly.
Pair Corralation between Citigroup and LIBERTY DEFENSE
Taking into account the 90-day investment horizon Citigroup is expected to generate 10.98 times less return on investment than LIBERTY DEFENSE. But when comparing it to its historical volatility, Citigroup is 11.85 times less risky than LIBERTY DEFENSE. It trades about 0.16 of its potential returns per unit of risk. LIBERTY DEFENSE H is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 30.00 in LIBERTY DEFENSE H on October 15, 2024 and sell it today you would earn a total of 26.00 from holding LIBERTY DEFENSE H or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.72% |
| Values | Daily Returns |
Citigroup vs. LIBERTY DEFENSE H
Performance |
| Timeline |
| Citigroup |
| LIBERTY DEFENSE H |
Citigroup and LIBERTY DEFENSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and LIBERTY DEFENSE
The main advantage of trading using opposite Citigroup and LIBERTY DEFENSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, LIBERTY DEFENSE 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 LIBERTY DEFENSE will offset losses from the drop in LIBERTY DEFENSE's long position.| Citigroup vs. Nu Holdings | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| LIBERTY DEFENSE vs. ASSA ABLOY AB | LIBERTY DEFENSE vs. Halma plc | LIBERTY DEFENSE vs. Allegion plc | LIBERTY DEFENSE vs. Superior Plus Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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