Correlation Between Citigroup and Odonate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Citigroup and Odonate Therapeutics 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 Odonate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Odonate Therapeutics, you can compare the effects of market volatilities on Citigroup and Odonate Therapeutics 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 Odonate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Odonate Therapeutics.
Diversification Opportunities for Citigroup and Odonate Therapeutics
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Odonate is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Odonate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odonate Therapeutics 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 Odonate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odonate Therapeutics has no effect on the direction of Citigroup i.e., Citigroup and Odonate Therapeutics go up and down completely randomly.
Pair Corralation between Citigroup and Odonate Therapeutics
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.39 times less return on investment than Odonate Therapeutics. But when comparing it to its historical volatility, Citigroup is 1.68 times less risky than Odonate Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Odonate Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Odonate Therapeutics on August 31, 2024 and sell it today you would earn a total of 5.00 from holding Odonate Therapeutics or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.81% |
| Values | Daily Returns |
Citigroup vs. Odonate Therapeutics
Performance |
| Timeline |
| Citigroup |
| Odonate Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Odonate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Odonate Therapeutics
The main advantage of trading using opposite Citigroup and Odonate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Odonate Therapeutics 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 Odonate Therapeutics will offset losses from the drop in Odonate Therapeutics' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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