Correlation Between Citigroup and Li Ning
Can any of the company-specific risk be diversified away by investing in both Citigroup and Li Ning 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 Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Li Ning Co, you can compare the effects of market volatilities on Citigroup and Li Ning 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 Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Li Ning.
Diversification Opportunities for Citigroup and Li Ning
Weak diversification
The 3 months correlation between Citigroup and LNNGY is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Li Ning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Ning 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 Li Ning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Ning has no effect on the direction of Citigroup i.e., Citigroup and Li Ning go up and down completely randomly.
Pair Corralation between Citigroup and Li Ning
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.57 times more return on investment than Li Ning. However, Citigroup is 1.75 times less risky than Li Ning. It trades about 0.21 of its potential returns per unit of risk. Li Ning Co is currently generating about 0.03 per unit of risk. If you would invest 6,393 in Citigroup on August 31, 2024 and sell it today you would earn a total of 623.00 from holding Citigroup or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Li Ning Co
Performance |
| Timeline |
| Citigroup |
| Li Ning |
Citigroup and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Li Ning
The main advantage of trading using opposite Citigroup and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Li Ning 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 Li Ning will offset losses from the drop in Li Ning's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Li Ning vs. YETI Holdings | Li Ning vs. Callaway Golf | Li Ning vs. Acushnet Holdings Corp | Li Ning vs. Planet Fitness |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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