Correlation Between Citigroup and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Citigroup and Lonza Group 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 Lonza Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Lonza Group AG, you can compare the effects of market volatilities on Citigroup and Lonza Group 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 Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Lonza Group.
Diversification Opportunities for Citigroup and Lonza Group
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Lonza is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG 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 Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group AG has no effect on the direction of Citigroup i.e., Citigroup and Lonza Group go up and down completely randomly.
Pair Corralation between Citigroup and Lonza Group
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.76 times more return on investment than Lonza Group. However, Citigroup is 1.31 times less risky than Lonza Group. It trades about 0.07 of its potential returns per unit of risk. Lonza Group AG is currently generating about 0.03 per unit of risk. If you would invest 4,293 in Citigroup on September 3, 2024 and sell it today you would earn a total of 2,846 from holding Citigroup or generate 66.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Lonza Group AG
Performance |
| Timeline |
| Citigroup |
| Lonza Group AG |
Citigroup and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Lonza Group
The main advantage of trading using opposite Citigroup and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lonza Group 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 Lonza Group will offset losses from the drop in Lonza Group's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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