Correlation Between Citigroup and Neutra Corp
Can any of the company-specific risk be diversified away by investing in both Citigroup and Neutra Corp 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 Neutra Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Neutra Corp, you can compare the effects of market volatilities on Citigroup and Neutra Corp 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 Neutra Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Neutra Corp.
Diversification Opportunities for Citigroup and Neutra Corp
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Neutra is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Neutra Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neutra Corp 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 Neutra Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neutra Corp has no effect on the direction of Citigroup i.e., Citigroup and Neutra Corp go up and down completely randomly.
Pair Corralation between Citigroup and Neutra Corp
Taking into account the 90-day investment horizon Citigroup is expected to generate 6.86 times less return on investment than Neutra Corp. But when comparing it to its historical volatility, Citigroup is 12.61 times less risky than Neutra Corp. It trades about 0.11 of its potential returns per unit of risk. Neutra Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Neutra Corp on August 28, 2024 and sell it today you would lose (0.01) from holding Neutra Corp or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Neutra Corp
Performance |
| Timeline |
| Citigroup |
| Neutra Corp |
Citigroup and Neutra Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Neutra Corp
The main advantage of trading using opposite Citigroup and Neutra Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Neutra Corp 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 Neutra Corp will offset losses from the drop in Neutra Corp's long position.The idea behind Citigroup and Neutra Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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