Correlation Between Citigroup and Mechanics Construction
Can any of the company-specific risk be diversified away by investing in both Citigroup and Mechanics Construction 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 Mechanics Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Mechanics Construction and, you can compare the effects of market volatilities on Citigroup and Mechanics Construction 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 Mechanics Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Mechanics Construction.
Diversification Opportunities for Citigroup and Mechanics Construction
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Mechanics is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Mechanics Construction and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechanics Construction 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 Mechanics Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechanics Construction has no effect on the direction of Citigroup i.e., Citigroup and Mechanics Construction go up and down completely randomly.
Pair Corralation between Citigroup and Mechanics Construction
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.65 times more return on investment than Mechanics Construction. However, Citigroup is 1.54 times less risky than Mechanics Construction. It trades about 0.08 of its potential returns per unit of risk. Mechanics Construction and is currently generating about 0.04 per unit of risk. If you would invest 4,525 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,562 from holding Citigroup or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.92% |
| Values | Daily Returns |
Citigroup vs. Mechanics Construction and
Performance |
| Timeline |
| Citigroup |
| Mechanics Construction |
Citigroup and Mechanics Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Mechanics Construction
The main advantage of trading using opposite Citigroup and Mechanics Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Mechanics Construction 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 Mechanics Construction will offset losses from the drop in Mechanics Construction'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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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