Correlation Between Citigroup and Power Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and Power Financial 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 Power Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Power Financial 51, you can compare the effects of market volatilities on Citigroup and Power Financial 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 Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Power Financial.
Diversification Opportunities for Citigroup and Power Financial
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Power is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Power Financial 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial 51 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 Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial 51 has no effect on the direction of Citigroup i.e., Citigroup and Power Financial go up and down completely randomly.
Pair Corralation between Citigroup and Power Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.34 times more return on investment than Power Financial. However, Citigroup is 2.34 times more volatile than Power Financial 51. It trades about 0.15 of its potential returns per unit of risk. Power Financial 51 is currently generating about 0.11 per unit of risk. If you would invest 3,705 in Citigroup on August 25, 2024 and sell it today you would earn a total of 3,279 from holding Citigroup or generate 88.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Power Financial 51
Performance |
| Timeline |
| Citigroup |
| Power Financial 51 |
Citigroup and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Power Financial
The main advantage of trading using opposite Citigroup and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Power Financial 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 Power Financial will offset losses from the drop in Power Financial's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Power Financial vs. VIP Entertainment Technologies | Power Financial vs. Cogeco Communications | Power Financial vs. TGS Esports | Power Financial vs. Verizon Communications CDR |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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