Correlation Between Citigroup and Opter AB
Can any of the company-specific risk be diversified away by investing in both Citigroup and Opter AB 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 Opter AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Opter AB, you can compare the effects of market volatilities on Citigroup and Opter AB 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 Opter AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Opter AB.
Diversification Opportunities for Citigroup and Opter AB
Poor diversification
The 3 months correlation between Citigroup and Opter is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Opter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opter AB 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 Opter AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opter AB has no effect on the direction of Citigroup i.e., Citigroup and Opter AB go up and down completely randomly.
Pair Corralation between Citigroup and Opter AB
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.05 times more return on investment than Opter AB. However, Citigroup is 1.05 times more volatile than Opter AB. It trades about 0.24 of its potential returns per unit of risk. Opter AB is currently generating about 0.25 per unit of risk. If you would invest 6,245 in Citigroup on August 25, 2024 and sell it today you would earn a total of 739.00 from holding Citigroup or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Opter AB
Performance |
| Timeline |
| Citigroup |
| Opter AB |
Citigroup and Opter AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Opter AB
The main advantage of trading using opposite Citigroup and Opter AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Opter AB 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 Opter AB will offset losses from the drop in Opter AB's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Opter AB vs. Kjell Group AB | Opter AB vs. Upsales Technology AB | Opter AB vs. Avensia publ AB | Opter AB vs. Generic Sweden publ |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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