Correlation Between Citigroup and Legible
Can any of the company-specific risk be diversified away by investing in both Citigroup and Legible 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 Legible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Legible, you can compare the effects of market volatilities on Citigroup and Legible 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 Legible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Legible.
Diversification Opportunities for Citigroup and Legible
Poor diversification
The 3 months correlation between Citigroup and Legible is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Legible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legible 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 Legible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legible has no effect on the direction of Citigroup i.e., Citigroup and Legible go up and down completely randomly.
Pair Corralation between Citigroup and Legible
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.11 times more return on investment than Legible. However, Citigroup is 8.76 times less risky than Legible. It trades about 0.27 of its potential returns per unit of risk. Legible is currently generating about -0.01 per unit of risk. If you would invest 6,315 in Citigroup on September 2, 2024 and sell it today you would earn a total of 772.00 from holding Citigroup or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Legible
Performance |
| Timeline |
| Citigroup |
| Legible |
Citigroup and Legible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Legible
The main advantage of trading using opposite Citigroup and Legible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Legible 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 Legible will offset losses from the drop in Legible's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Legible vs. Slate Office REIT | Legible vs. HUMANA INC | Legible vs. Aquagold International | Legible vs. Barloworld Ltd ADR |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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