Correlation Between Citigroup and OrangePL
Can any of the company-specific risk be diversified away by investing in both Citigroup and OrangePL 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 OrangePL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and OrangePL, you can compare the effects of market volatilities on Citigroup and OrangePL 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 OrangePL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and OrangePL.
Diversification Opportunities for Citigroup and OrangePL
Pay attention - limited upside
The 3 months correlation between Citigroup and OrangePL is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and OrangePL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrangePL 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 OrangePL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrangePL has no effect on the direction of Citigroup i.e., Citigroup and OrangePL go up and down completely randomly.
Pair Corralation between Citigroup and OrangePL
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.42 times more return on investment than OrangePL. However, Citigroup is 1.42 times more volatile than OrangePL. It trades about 0.26 of its potential returns per unit of risk. OrangePL is currently generating about -0.03 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. OrangePL
Performance |
| Timeline |
| Citigroup |
| OrangePL |
Citigroup and OrangePL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and OrangePL
The main advantage of trading using opposite Citigroup and OrangePL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, OrangePL 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 OrangePL will offset losses from the drop in OrangePL's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| OrangePL vs. MCI Management SA | OrangePL vs. New Tech Venture | OrangePL vs. Drago entertainment SA | OrangePL vs. Quantum Software SA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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