Correlation Between Citigroup and Reece
Can any of the company-specific risk be diversified away by investing in both Citigroup and Reece 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 Reece into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Reece, you can compare the effects of market volatilities on Citigroup and Reece 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 Reece. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Reece.
Diversification Opportunities for Citigroup and Reece
Excellent diversification
The 3 months correlation between Citigroup and Reece is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Reece in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reece 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 Reece. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reece has no effect on the direction of Citigroup i.e., Citigroup and Reece go up and down completely randomly.
Pair Corralation between Citigroup and Reece
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.15 times more return on investment than Reece. However, Citigroup is 1.15 times more volatile than Reece. It trades about 0.11 of its potential returns per unit of risk. Reece is currently generating about -0.04 per unit of risk. If you would invest 6,104 in Citigroup on August 28, 2024 and sell it today you would earn a total of 871.00 from holding Citigroup or generate 14.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Citigroup vs. Reece
Performance |
| Timeline |
| Citigroup |
| Reece |
Citigroup and Reece Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Reece
The main advantage of trading using opposite Citigroup and Reece positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Reece 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 Reece will offset losses from the drop in Reece's long position.The idea behind Citigroup and Reece pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Reece vs. Renascor Resources | Reece vs. Venus Metals | Reece vs. Havilah Resources | Reece vs. Asara Resources |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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