Correlation Between Citigroup and Orca
Can any of the company-specific risk be diversified away by investing in both Citigroup and Orca 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 Orca into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Orca, you can compare the effects of market volatilities on Citigroup and Orca 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 Orca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Orca.
Diversification Opportunities for Citigroup and Orca
Very poor diversification
The 3 months correlation between Citigroup and Orca is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Orca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca 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 Orca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca has no effect on the direction of Citigroup i.e., Citigroup and Orca go up and down completely randomly.
Pair Corralation between Citigroup and Orca
Taking into account the 90-day investment horizon Citigroup is expected to generate 16.34 times less return on investment than Orca. But when comparing it to its historical volatility, Citigroup is 10.04 times less risky than Orca. It trades about 0.07 of its potential returns per unit of risk. Orca is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Orca on August 24, 2024 and sell it today you would earn a total of 325.00 from holding Orca or generate 773.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 39.31% |
| Values | Daily Returns |
Citigroup vs. Orca
Performance |
| Timeline |
| Citigroup |
| Orca |
Citigroup and Orca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Orca
The main advantage of trading using opposite Citigroup and Orca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Orca 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 Orca will offset losses from the drop in Orca's 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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