Correlation Between Citigroup and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Citigroup and Parker Hannifin 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 Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Parker Hannifin, you can compare the effects of market volatilities on Citigroup and Parker Hannifin 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 Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Parker Hannifin.
Diversification Opportunities for Citigroup and Parker Hannifin
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Parker is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin 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 Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of Citigroup i.e., Citigroup and Parker Hannifin go up and down completely randomly.
Pair Corralation between Citigroup and Parker Hannifin
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.76 times more return on investment than Parker Hannifin. However, Citigroup is 1.76 times more volatile than Parker Hannifin. It trades about 0.42 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.18 per unit of risk. If you would invest 6,919 in Citigroup on October 21, 2024 and sell it today you would earn a total of 1,080 from holding Citigroup or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Parker Hannifin
Performance |
| Timeline |
| Citigroup |
| Parker Hannifin |
Citigroup and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Parker Hannifin
The main advantage of trading using opposite Citigroup and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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