Correlation Between Citigroup and Optimum Large
Can any of the company-specific risk be diversified away by investing in both Citigroup and Optimum Large 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 Optimum Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Optimum Large Cap, you can compare the effects of market volatilities on Citigroup and Optimum Large 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 Optimum Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Optimum Large.
Diversification Opportunities for Citigroup and Optimum Large
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Optimum is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Optimum Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Large Cap 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 Optimum Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Large Cap has no effect on the direction of Citigroup i.e., Citigroup and Optimum Large go up and down completely randomly.
Pair Corralation between Citigroup and Optimum Large
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.08 times more return on investment than Optimum Large. However, Citigroup is 3.08 times more volatile than Optimum Large Cap. It trades about 0.11 of its potential returns per unit of risk. Optimum Large Cap is currently generating about 0.11 per unit of risk. If you would invest 6,209 in Citigroup on August 30, 2024 and sell it today you would earn a total of 807.00 from holding Citigroup or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Optimum Large Cap
Performance |
| Timeline |
| Citigroup |
| Optimum Large Cap |
Citigroup and Optimum Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Optimum Large
The main advantage of trading using opposite Citigroup and Optimum Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Optimum Large 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 Optimum Large will offset losses from the drop in Optimum Large'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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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