Correlation Between Citigroup and Plandai Biotech
Can any of the company-specific risk be diversified away by investing in both Citigroup and Plandai Biotech 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 Plandai Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Plandai Biotech, you can compare the effects of market volatilities on Citigroup and Plandai Biotech 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 Plandai Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Plandai Biotech.
Diversification Opportunities for Citigroup and Plandai Biotech
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Plandai is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Plandai Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plandai Biotech 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 Plandai Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plandai Biotech has no effect on the direction of Citigroup i.e., Citigroup and Plandai Biotech go up and down completely randomly.
Pair Corralation between Citigroup and Plandai Biotech
Taking into account the 90-day investment horizon Citigroup is expected to generate 54.53 times less return on investment than Plandai Biotech. But when comparing it to its historical volatility, Citigroup is 22.5 times less risky than Plandai Biotech. It trades about 0.07 of its potential returns per unit of risk. Plandai Biotech is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.04 in Plandai Biotech on August 30, 2024 and sell it today you would lose (0.02) from holding Plandai Biotech or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Plandai Biotech
Performance |
| Timeline |
| Citigroup |
| Plandai Biotech |
Citigroup and Plandai Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Plandai Biotech
The main advantage of trading using opposite Citigroup and Plandai Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Plandai Biotech 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 Plandai Biotech will offset losses from the drop in Plandai Biotech's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Plandai Biotech vs. PayPal Holdings | Plandai Biotech vs. Nasdaq Inc | Plandai Biotech vs. Choice Hotels International | Plandai Biotech vs. Microsoft |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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