Correlation Between Citigroup and Lotus Bakeries
Can any of the company-specific risk be diversified away by investing in both Citigroup and Lotus Bakeries 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 Lotus Bakeries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Lotus Bakeries, you can compare the effects of market volatilities on Citigroup and Lotus Bakeries 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 Lotus Bakeries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Lotus Bakeries.
Diversification Opportunities for Citigroup and Lotus Bakeries
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Lotus is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lotus Bakeries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Bakeries 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 Lotus Bakeries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Bakeries has no effect on the direction of Citigroup i.e., Citigroup and Lotus Bakeries go up and down completely randomly.
Pair Corralation between Citigroup and Lotus Bakeries
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.51 times more return on investment than Lotus Bakeries. However, Citigroup is 1.51 times more volatile than Lotus Bakeries. It trades about 0.41 of its potential returns per unit of risk. Lotus Bakeries is currently generating about -0.04 per unit of risk. If you would invest 6,977 in Citigroup on October 23, 2024 and sell it today you would earn a total of 1,022 from holding Citigroup or generate 14.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Lotus Bakeries
Performance |
| Timeline |
| Citigroup |
| Lotus Bakeries |
Citigroup and Lotus Bakeries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Lotus Bakeries
The main advantage of trading using opposite Citigroup and Lotus Bakeries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lotus Bakeries 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 Lotus Bakeries will offset losses from the drop in Lotus Bakeries' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Lotus Bakeries vs. Sofina Socit Anonyme | Lotus Bakeries vs. Ackermans Van Haaren | Lotus Bakeries vs. Melexis NV | Lotus Bakeries vs. DIeteren Group SA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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