Correlation Between Citigroup and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Citigroup and Pentair PLC 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 Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Pentair PLC, you can compare the effects of market volatilities on Citigroup and Pentair PLC 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 Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Pentair PLC.
Diversification Opportunities for Citigroup and Pentair PLC
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Pentair is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC 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 Pentair PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair PLC has no effect on the direction of Citigroup i.e., Citigroup and Pentair PLC go up and down completely randomly.
Pair Corralation between Citigroup and Pentair PLC
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.49 times more return on investment than Pentair PLC. However, Citigroup is 1.49 times more volatile than Pentair PLC. It trades about 0.25 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.08 per unit of risk. If you would invest 6,315 in Citigroup on November 1, 2024 and sell it today you would earn a total of 1,871 from holding Citigroup or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Pentair PLC
Performance |
| Timeline |
| Citigroup |
| Pentair PLC |
Citigroup and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Pentair PLC
The main advantage of trading using opposite Citigroup and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Pentair PLC 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 Pentair PLC will offset losses from the drop in Pentair PLC's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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