Correlation Between Citigroup and Organto Foods
Can any of the company-specific risk be diversified away by investing in both Citigroup and Organto Foods 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 Organto Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Organto Foods, you can compare the effects of market volatilities on Citigroup and Organto Foods 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 Organto Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Organto Foods.
Diversification Opportunities for Citigroup and Organto Foods
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Organto is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Organto Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organto Foods 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 Organto Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organto Foods has no effect on the direction of Citigroup i.e., Citigroup and Organto Foods go up and down completely randomly.
Pair Corralation between Citigroup and Organto Foods
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.48 times more return on investment than Organto Foods. However, Citigroup is 2.07 times less risky than Organto Foods. It trades about 0.33 of its potential returns per unit of risk. Organto Foods is currently generating about -0.28 per unit of risk. If you would invest 6,235 in Citigroup on September 4, 2024 and sell it today you would earn a total of 907.00 from holding Citigroup or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Organto Foods
Performance |
| Timeline |
| Citigroup |
| Organto Foods |
Citigroup and Organto Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Organto Foods
The main advantage of trading using opposite Citigroup and Organto Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Organto Foods 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 Organto Foods will offset losses from the drop in Organto Foods' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Organto Foods vs. Calavo Growers | Organto Foods vs. SpartanNash Co | Organto Foods vs. The Andersons | Organto Foods vs. The Chefs Warehouse |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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