Correlation Between Citigroup and PVH Corp
Can any of the company-specific risk be diversified away by investing in both Citigroup and PVH Corp 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 PVH Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and PVH Corp, you can compare the effects of market volatilities on Citigroup and PVH Corp 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and PVH Corp.
Diversification Opportunities for Citigroup and PVH Corp
Almost no diversification
The 3 months correlation between Citigroup and PVH is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Citigroup i.e., Citigroup and PVH Corp go up and down completely randomly.
Pair Corralation between Citigroup and PVH Corp
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.23 times less return on investment than PVH Corp. In addition to that, Citigroup is 1.15 times more volatile than PVH Corp. It trades about 0.14 of its total potential returns per unit of risk. PVH Corp is currently generating about 0.19 per unit of volatility. If you would invest 8,673 in PVH Corp on September 20, 2024 and sell it today you would earn a total of 1,762 from holding PVH Corp or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Citigroup vs. PVH Corp
Performance |
| Timeline |
| Citigroup |
| PVH Corp |
Citigroup and PVH Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and PVH Corp
The main advantage of trading using opposite Citigroup and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| PVH Corp vs. CHINA TELECOM H | PVH Corp vs. INTERSHOP Communications Aktiengesellschaft | PVH Corp vs. Dairy Farm International | PVH Corp vs. Associated British Foods |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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