Correlation Between Citigroup and Light Wonder
Can any of the company-specific risk be diversified away by investing in both Citigroup and Light Wonder 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 Light Wonder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Light Wonder, you can compare the effects of market volatilities on Citigroup and Light Wonder 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 Light Wonder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Light Wonder.
Diversification Opportunities for Citigroup and Light Wonder
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Light is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder 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 Light Wonder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Wonder has no effect on the direction of Citigroup i.e., Citigroup and Light Wonder go up and down completely randomly.
Pair Corralation between Citigroup and Light Wonder
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.76 times more return on investment than Light Wonder. However, Citigroup is 1.32 times less risky than Light Wonder. It trades about 0.23 of its potential returns per unit of risk. Light Wonder is currently generating about 0.03 per unit of risk. If you would invest 6,360 in Citigroup on August 27, 2024 and sell it today you would earn a total of 624.00 from holding Citigroup or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Light Wonder
Performance |
| Timeline |
| Citigroup |
| Light Wonder |
Citigroup and Light Wonder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Light Wonder
The main advantage of trading using opposite Citigroup and Light Wonder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Light Wonder 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 Light Wonder will offset losses from the drop in Light Wonder's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Light Wonder vs. Codere Online Corp | Light Wonder vs. Inspired Entertainment | Light Wonder vs. International Game Technology | Light Wonder vs. Accel Entertainment |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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