Correlation Between Citigroup and Pax Global
Can any of the company-specific risk be diversified away by investing in both Citigroup and Pax Global 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 Pax Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Pax Global Environmental, you can compare the effects of market volatilities on Citigroup and Pax Global 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 Pax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Pax Global.
Diversification Opportunities for Citigroup and Pax Global
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Pax is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pax Global Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Global Environmental 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 Pax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Global Environmental has no effect on the direction of Citigroup i.e., Citigroup and Pax Global go up and down completely randomly.
Pair Corralation between Citigroup and Pax Global
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.48 times more return on investment than Pax Global. However, Citigroup is 2.48 times more volatile than Pax Global Environmental. It trades about 0.21 of its potential returns per unit of risk. Pax Global Environmental is currently generating about 0.0 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Pax Global Environmental
Performance |
| Timeline |
| Citigroup |
| Pax Global Environmental |
Citigroup and Pax Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Pax Global
The main advantage of trading using opposite Citigroup and Pax Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Pax Global 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 Pax Global will offset losses from the drop in Pax Global's long position.The idea behind Citigroup and Pax Global Environmental pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pax Global vs. T Rowe Price | Pax Global vs. Msif Emerging Markets | Pax Global vs. Delaware Small Cap | Pax Global vs. Fidelity Otc Portfolio |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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