Correlation Between Citigroup and Ferrari NV
Can any of the company-specific risk be diversified away by investing in both Citigroup and Ferrari NV 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 Ferrari NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Ferrari NV, you can compare the effects of market volatilities on Citigroup and Ferrari NV 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 Ferrari NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Ferrari NV.
Diversification Opportunities for Citigroup and Ferrari NV
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Ferrari is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ferrari NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrari NV 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 Ferrari NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrari NV has no effect on the direction of Citigroup i.e., Citigroup and Ferrari NV go up and down completely randomly.
Pair Corralation between Citigroup and Ferrari NV
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.03 times more return on investment than Ferrari NV. However, Citigroup is 1.03 times more volatile than Ferrari NV. It trades about 0.25 of its potential returns per unit of risk. Ferrari NV is currently generating about -0.27 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Ferrari NV
Performance |
| Timeline |
| Citigroup |
| Ferrari NV |
Citigroup and Ferrari NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Ferrari NV
The main advantage of trading using opposite Citigroup and Ferrari NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Ferrari NV 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 Ferrari NV will offset losses from the drop in Ferrari NV's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Ferrari NV vs. Nio Class A | Ferrari NV vs. Lucid Group | Ferrari NV vs. Tesla Inc | Ferrari NV vs. Mullen Automotive |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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