Correlation Between Citigroup and Quanex Building
Can any of the company-specific risk be diversified away by investing in both Citigroup and Quanex Building 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 Quanex Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Quanex Building Products, you can compare the effects of market volatilities on Citigroup and Quanex Building 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 Quanex Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Quanex Building.
Diversification Opportunities for Citigroup and Quanex Building
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Quanex is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Quanex Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanex Building Products 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 Quanex Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanex Building Products has no effect on the direction of Citigroup i.e., Citigroup and Quanex Building go up and down completely randomly.
Pair Corralation between Citigroup and Quanex Building
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.85 times more return on investment than Quanex Building. However, Citigroup is 1.18 times less risky than Quanex Building. It trades about 0.41 of its potential returns per unit of risk. Quanex Building Products is currently generating about -0.24 per unit of risk. If you would invest 6,994 in Citigroup on November 3, 2024 and sell it today you would earn a total of 1,149 from holding Citigroup or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Quanex Building Products
Performance |
| Timeline |
| Citigroup |
| Quanex Building Products |
Citigroup and Quanex Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Quanex Building
The main advantage of trading using opposite Citigroup and Quanex Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Quanex Building 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 Quanex Building will offset losses from the drop in Quanex Building's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Quanex Building vs. Gibraltar Industries | Quanex Building vs. Carpenter Technology | Quanex Building vs. Myers Industries | Quanex Building vs. Griffon |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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