Correlation Between Citigroup and Pizza Pizza
Can any of the company-specific risk be diversified away by investing in both Citigroup and Pizza Pizza 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 Pizza Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Pizza Pizza Royalty, you can compare the effects of market volatilities on Citigroup and Pizza Pizza 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 Pizza Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Pizza Pizza.
Diversification Opportunities for Citigroup and Pizza Pizza
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Pizza is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pizza Pizza Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pizza Pizza Royalty 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 Pizza Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pizza Pizza Royalty has no effect on the direction of Citigroup i.e., Citigroup and Pizza Pizza go up and down completely randomly.
Pair Corralation between Citigroup and Pizza Pizza
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.79 times more return on investment than Pizza Pizza. However, Citigroup is 1.79 times more volatile than Pizza Pizza Royalty. It trades about 0.07 of its potential returns per unit of risk. Pizza Pizza Royalty is currently generating about 0.03 per unit of risk. If you would invest 4,134 in Citigroup on August 30, 2024 and sell it today you would earn a total of 2,882 from holding Citigroup or generate 69.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Citigroup vs. Pizza Pizza Royalty
Performance |
| Timeline |
| Citigroup |
| Pizza Pizza Royalty |
Citigroup and Pizza Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Pizza Pizza
The main advantage of trading using opposite Citigroup and Pizza Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Pizza Pizza 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 Pizza Pizza will offset losses from the drop in Pizza Pizza's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Pizza Pizza vs. Boston Pizza Royalties | Pizza Pizza vs. NorthWest Healthcare Properties | Pizza Pizza vs. The Keg Royalties | Pizza Pizza vs. Rogers Sugar |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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